- UK stocks fell at the start of the week but recovered into Wednesday’s close, lifted by Chancellor Rishi Sunak’s budget statement. Housebuilder’s made gains, boosted by confirmation that the stamp duty holiday will be extended until June.
- From there stocks declined to the end of the week with investors focusing back on rising US Treasury yields and concerns about inflation.
- Maybe counter-intuitively, better-than-expected US jobs data didn’t help. As we wrote before we may be entering a phase of good economic news being taken as bad news for the market.
- Our Breadth indicator is positive but our Momentum Indicator, although still positive, ticked down again.
- US Stocks were higher at the start of last week, bouncing back strongly as the US 10-year Treasury yield fell back towards 1.4% providing relief for risk assets which had declined sharply as yields rose above 1.6% the previous week.
- Midweek however, Treasury yields rose again and concerns about inflation resurfaced. Losses were extended on Thursday after Federal Reserve Chair, Jerome Powell failed to reassure markets over interest rate rises. Powell said the recent rise in yields was “notable” but the Fed would be “patient”. This wasn’t enough for the markets and Treasury bond yields rose sharply again. Bond markets appear to be pricing in the strong possibility that the Fed will raise rates due to inflationary pressures.
- Over this weekend Senate Democrats passed their $1.9 trillion coronavirus relief package, and it now goes to the House for expected approval in the coming days.
- Our Breadth indicator stayed positive but our Momentum Indicator, although still positive, ticked down again.
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