Market sentiment was a mixed bag this past week, with a rotation out of growth and into value stocks witnessed. On Wall Street[1], the Dow Jones Industrial Average gained about 1.8% while the tech-heavy Nasdaq[2] 100 shed roughly 1.91% off its value. In Europe, the UK’s FTSE 100[3] outperformed, gaining 2.27%. Japan’s Nikkei 225[4] was down 0.35%.
All eyes remained on longer-term Treasury yields. The 10-year rate continued to climb into new highs for the year, reflecting rising confidence in the broader economic outlook as inflation expectations are driven higher. Fed Chair Jerome Powell also appeared to be rather sanguine about developments in bond markets.
The US Dollar[5] mostly outperformed its major counterparts, with the exception of the Canadian Dollar[6]. Some of the worst-performing ones were the Swiss Franc[7] and Japanese Yen[8]. Taking a look at commodities, WTI[9] crude oil prices soared, closing at the highest since 2018. Unexpected output holds from OPEC+ drove energy prices. Anti-fiat gold prices[10] further weakened.
Ahead, traders will be tuning into the European Central Bank and Bank of Canada monetary policy announcements. The rise in longer-term government bond yields has not been mutually exclusive to the United States, those in Canada and Europe are also rising. As such, it will be key to see how central bankers feel about longer-term bonds and whether or not action is warranted.
Covid vaccinations have been driving the improving global growth outlook, but as nations open up, there is a risk that some may let their guard down. Traders will also be watching US and German CPI data for updates on inflation. Canada will release
