Weekly Market Insight

Latest Economic & Market Update 20th January 2021

20th January 2021

Good afternoon, it is January 20th 2021 and here is your economic and market update from BlackBee. 

Today’s focus:

  • US law makers need to “act big” on fiscal policy – Janet Yellen, US Treasury Nominee
  • Markets encouraged by comments and take on risk

Janet Yellen, Joe Biden’s nominee for Treasury Secretary and former Federal Reserve Chair, urged US lawmakers to “act big” on pandemic relief spending. Speaking to members of the Senate Finance Committee, Ms. Yellen argued that the benefits of igniting economic growth outweigh the risks of a higher debt burden. While acknowledging the impact fiscal spending would increase the country’s debt levels, the cost of this debt will not increase due to low-interest rates, stating “Neither the president-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big.” Last week President-Elect Joe Biden, who will be sworn into office today, outlined a $1.9 trillion stimulus package proposal. (Source Reuters)

Markets were encouraged by Ms. Yellen’s comments. The S&P 500 index rose yesterday by 0.8% while the technology-focused Nasdaq Composite rose 1.5%. US Treasury bonds were sold as investors pivoted away from the haven asset. The 10-year yield rose by 1 basis point to 1.1%. Yield rise as bond prices fall. Brent crude oil rose yesterday by 2.10% by reaching $55.90. The European index Eurostoxx 600 finished 0.2% weaker but is up 0.72% at the time of writing on Wednesday morning, following US equity price direction of the previous day. (Source: FT, Bloomberg)