The S&P500 index continues to mark new all-time highs despite 10-year Treasury yields reaching 14-month highs as the market absorbed big spending plans. The recent rise in US Treasury yield reflects market sentiment for a trajectory in economic recovery fuelled by a very large fiscal stimulus package of US$1.9 trillion ($2.5 trillion) announced in early March and “once in a generation” US$2.25 trillion infrastructure plan unveiled recently by the Biden administration are boosting market confidence.
Economies took a hit last year since the Covid-19 pandemic even as central banks prop up liquidity through fiscal and monetary support. We digested a sizeable and targeted fiscal and monetary policy response and witnessed the market’s illiquidity and vulnerability. Stepping into 2Q2021, it is crucial to stay ahead and be equipped for a post-Covid world — The New Economic Cycle.
The global economy will recover more quickly and robustly from the Covid-19 recession than from a more typical large downturn. The backdrop for our optimistic outlook is the remarkable resilience we have seen despite the pandemic and the vaccine roll-outs that are going extremely well.
