- Global equities continued to grind higher last week reflecting ongoing solid corporate earnings and still relatively benign bond yields. Indeed, lingering fears with regard to the potential impact of delta on economic growth are likely helping offset fears which may otherwise have arisen from strong U.S. economic growth and associated interest rate fears.
- The lower than feared U.S. core CPI result last week helped support sentiment and was consistent with the emerging view that inflation fears have peaked. That said, Fed speakers again flagged a likely tapering announcement late this year, which must by now be close to fully priced into the market. Talk of further U.S. fiscal stimulus also remains the ‘gift that keeps on giving’ with the Senate passing a US$500m infrastructure bill, only for the Democrat-controlled lower house to hold back on agreeing – in the hope of forcing the Senate to agree on an even larger US$3.5 trillion budget package.
- As evident in the chart set below, U.S. stocks are trending up and U.S. long bond yields and the US dollar are still trending sideways/down. Gold remains in a downtrend and oil has pulled back from highs in early July.
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