Arman Hassanniakalager via The Conversation | The global market in government bonds has been bleeding red lately. The US ten-year strongly influences the price of everything from mortgages to business loans in the US, and by extension around the world, so such a sharp rise has the potential to reduce borrowing and weaken the economic recovery from COVID –especially when there is so much debt in the global system.
Monex Europe | Chair Powell doubled down on the tone struck by the SEP and policy statement in his press conference yesterday emphasising the need to witness substantial progress in the recovery before signalling the exit of post-pandemic policy measures. The tone taken by Powell suggests the Federal Reserve will happily sit behind the curve as inflation overshoots in the coming years, helping to further push back rate expectations and anchor real rates in bond markets.
Pablo Pardo (Washington) | What if it turns out that we are going to come out of the Covid-19 recession too quickly? In Europe that sounds like a joke, of course, thanks to the disaster organized by the European Commission with the purchase of the vaccines, and the insistence of the northern EU countries that no funds should be committed for the revival of the lazy southern ones. But that is not the case in the US, where the vaccine campaign is going much faster, and the public authorities have not been shy about spending to stimulate the economy.
Portcolom AV | In the 1980s, “bond vigilantes” began to be referred to as the watchdogs of the economy. It was said that if the monetary and fiscal authorities did not regulate the economy properly, bond investors would. So if a central bank, for example, lagged in its monetary policies, the watchers would force it to act through pressure on bond market prices. Will the bond vigilantes return considering the attitude of central banks and governments in the face of rising inflation?
Kaitlyn Murphy , Wenjie Ge & Chris Buchbinder (Capital Group) | Ladies and gentlemen, start your batteries. Sure, we’ve been hearing about the advent of the electric car for a long time. But evidence is mounting that it has already arrived — ahead of schedule. Consider this: General Motors announced in January that it will stop manufacturing gas- and diesel-powered cars by 2035. This after Volkswagen, Europe’s largest automaker, disclosed plans to invest $86 billion to develop electric vehicles, digital factories and self-driving cars over the next five years.
Bryan Keogh via The Conversation| The U.S. economy and millions of people struggling because of the pandemic are about to get a US$1.9 trillion jolt of stimulating relief. On March 10, the House of Representatives approved a version of President Joe Biden’s coronavirus package that barely squeezed through the Senate. Both votes were almost entirely along party lines. Biden signed the bill into law on March 11. We turned to our archive to provide some context on this historic legislation.
Walmart estimates the acquisition of these products, destined for sale in its stores, will mean the creation of 750,000 jobs in the country over the next few years. The company has specified that its efforts will focus on six main product categories: plastics, textiles, small appliances, processed food, medical and pharmaceutical goods, and products for its own non-sales operations.
Vittorio Emanuele Parsi & Valerio Alfonso Brun | On January 25, addressing a virtual World Economic Forum, China’s President Xi Jinping not only strongly advocated for a multilateral approach to the COVID-19 pandemic but insisted on the virtues and systemic benefits of free trade and globalization. Jeopardizing those elements may introduce conflict into the international system, Xi warned, clearly referring to, although not mentioning, the US. Can China credibly profess the virtues of globalization to achieve harmony and balance in an international system if it doesn’t adhere to international law?
Olivia Álvarez (Monex Europe) | Joe Biden’s proposed $1,9 Tr stimulus bill will run its race in Senate next week, as House Democrats passed the legislation on Friday. The package includes $1400 direct payments to most Americans, a $400 weekly jobless benefit and an extension of unemployment insurance programs to a larger share of eligible candidates. The bill also includes $20bn for Covid-19 vaccinations, $50bn for testing and $350bn into state and local aids. The plan also aims to hike the federal minimum wage to $15/hour by 2025, although this particular amendment hangs on a thin balance.
Eva Cairns (Aberdeen Standard Investments) | December 2020 marked the fifth anniversary of the Paris Climate Agreement. For all the promises made during the talks, countries have already fallen woefully behind on their commitments to limit global warming. But could the narrative be shifting? Client demand for Paris-aligned investment solutions is growing rapidly. For example, the UN Net Zero Asset Owner Alliance consists of investors with combined assets of more than US$5 trillion (and growing).