Monthly Investment Strategy
February Global Macro Monthly & Investment Strategy - Vaccine and stimulus: too much of a good thing?
- The virus is fading from a year-end resurgence in most areas of the globe. Vaccine rollout is also underway. Economies will ease COVID-related restrictions at different paces depending on circumstances. This will govern the speed of economic rebound.
- Additionally, the US appears set to unleash a powerful fiscal stimulus. This will boost economic activity this year and next, we forecast to 6.2% and 4.5%. It also looks set to close the US output gap by the end of this year, bringing closer a sustainable rise in inflation.
- Financial markets are reacting to this shifting outlook: government bond yields are rising in the US, but also elsewhere. This is leading to a pause in risk markets, although we remain positive in outlook at this stage.
- Unchecked, the rise in yields may be a problem in areas where growth is not recovering as quickly. Notably the Euro area, but also in some emerging markets.
Full slide deck of our February Investment StrategyDownload Deck (3.27 MB)