Weekly Market Insight

Latest Economic & Market Update 18th March 2021

18th March 2021

Good afternoon, it is March 18th 2021 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Fed upwardly revised US economic growth forecasts.
  • Fed expects interest rates close to zero until at least 2024, bond yields rise.

The Federal Open Market Committee have upwardly revised the US GDP’s growth expectations for this year. Yesterday Jerome Powell announced that 2022 GDP growth is forecasted to be 6.5%. This is up from December’s prediction of 4.2%. US unemployment is expected to fall to 4.5%, another positive adjustment following December’s forecast of 5.0%.

Fed Chairman Jerome Powell continued in his dovish approach to monetary policy with the Fed signalling that it is willing to keep interest rates close to zero until at least 2024. “At the Fed, we will continue to provide the economy the support that it needs for as long as it takes.” said Mr. Powell. US Treasury yields widened yesterday by 2 basis points and continued into Thursday morning’s trading. The 10 Year US Treasury yield (at the time of writing) is 1.71% it’s highest level since January 2020. Mr. Powell’s dovish stance can be viewed as adding fuel to the recent inflation fear fire, evident by the rising treasury yields. As bonds sell off and prices drop, yields rise. Investors typically sell bonds in times of increasing inflation expectations as the fixed coupons and notional amounts are worth less in real money terms.

Best & Worst Performers of Large Cap US Stocks on Wednesday
Click image to enlarge

Global Market Update
(as at close of markets 17/03/2021)