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MORNING BID-Reflation it

Published 16/02/2021, 07:00 pm
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A look at the day ahead from Saikat Chatterjee.

The reflation song is resounding across world markets, with equities marching to new record peaks, U.S. 10-year Treasury yields touching 1.25% for the first time in almost a year and the U.S. dollar continuing to slip.

Oil prices, helped along by a Texas cold snap that's shuttered oil wells and refineries, are at 13-month highs. Even Swiss government debt, the safe-haven asset par excellence, saw 30-year yields climb above 0% on Monday for the first time since last April.

If investors are concerned about a Financial Times report that China could limit rare earth mineral supplies to U.S. defence contractors, there's no sign of it. Economic recovery expectations sent copper to new eight-year peaks while Australia's BHP has reported its best first-half profit in seven years, thanks to China's iron ore appetite.

What to make then of economic data which has so far been fairly lacklustre? Minutes from Australia's last central bank meeting cited a need for "very significant" monetary policy support for some time and final euro zone Q4 data is expected to show a 0.7% quarter on quarter contraction.

Meanwhile, Britain's pound, the unexpected winner of the coronavirus recovery trade, is homing in an April 2018 high of $1.40.

Key developments that should provide more direction to markets on Tuesday: -German February ZEW -Japan trade Jan -UK Inflation -San Francisco Fed's Mary Daly speaks -RBA minutes -TIC data on foreign Treasury purchases U.S. corporate results: AIG (NYSE:AIG), Occidental Petroleum (NYSE:OXY), Yandex

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https://tmsnrt.rs/3jHCFl9

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