Weekly Market Insight

Latest Economic & Market Update 28th January 2021

28th January 2021

Good afternoon, it is January 28th 2021 and here is your economic and market update from BlackBee.

  • Department of Finance release report on national debt.
  • FED hold interest rates and asset purchasing programme steady.

A report from the Department of Finance has shown that national debt in Ireland stood at over €219 billion at the end of last year, the equivalent of €44,000 for every person in the country. As a result of the effects of the pandemic the sharp increase in public borrowing has pushed total debt to 108% of modified gross national income, up 12% from the year prior. The debt-to-GNI figure is expected to climb to 115% this year due to changes announced in the budget, the equivalent of €47,700 for every person. On a positive note, the cost of servicing national debt has fallen as a result of declining borrowing costs due to central banks flooding the market with cheap money. The report suggests that public finances can absorb the rising levels of debt with Finance Minister Paschal Donohoe saying it was possible due to the good shape of public finances prior to the crisis. (Source: RTE)

Ireland hasn’t been alone in seeing debt levels rise as a result of the COVID-19 pandemic however. Last week Eurostat announced that debt levels in the Euro zone rose to 97% in Q3 2020 compared to 86% for the same period in 2019. Irelands debt to GDP ratio is well below the Euro Area average and stood at just over 60% in Q3 2020. Out of the 25 member states, 20 recorded an increase in debt to GDP from Q2 to Q3 2020, two remained stable and five member states recorded a decrease in debt to GDP levels. Ireland was one of the five countries to record a decrease in debt to GDP from Q2 to Q3 2020. (Source: Eurostat).

Following a two day meeting, the Federal Reserve has held its main interest rate close to zero and its asset purchases steady. The battle against the economic fallout from the pandemic was far from over, warned Jerome Powell. The FED had noted a weakening recovery as the US recorded net job losses in December among other weaknesses in economic data. Reiterating its September guidance, the FED said it would keep its main interest rate at its target range between 0–0.25% until full employment is in reach and inflation is on track to climb above the 2% target. (Source: FT)

Best & Worst Performers of Large Cap US Stocks on Wednesday
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Global Market Update
(as at close of markets 27/01/2021)