Greetings,
United States: The Philly Fed’s manufacturing report showed solid factory activity in the region, exceeding market expectations.
The report also showed manufacturers facing some price pressures, which they are passing on to their customers.
United Kingdom: The CBI report showed UK manufacturers struggling with the confluence of the pandemic and Brexit.
Eurozone: The ECB hinted at the possibility that it may not end up using the full amount allocated to the emergency QE program.
ECB: – … the Governing Council will continue the purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,850 billion. The Governing Council will conduct net asset purchases under the PEPP until at least the end of March 2022 and, in any case, until it judges that the coronavirus crisis phase is over. The purchases under the PEPP will be conducted to preserve favourable financing conditions over the pandemic period. If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full. Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation.
Bond yields (especially Italian yields) rose in response.
Emerging Markets: EM equity rally has been impressive.
Bloomberg’s fear/greed indicator is deep in greed territory.
Rates: The US 5-year, 5-year forward breakeven rate (inflation expectations) typically overshoots realized inflation.
Food For Thought: Technologies’ impact vs. time to full potential:
Edited by Devon Lall
Contact the Daily Shot Editor: Editor@DailyShotLetter.com