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The Weekly Brief 22 March 2021

Thought of the week Market statistics
The US economic outlook has improved substantially since the Federal Reserve (Fed) Change (%) Level Change (bps)
published their last forecasts three months ago. Vaccine rollout is progressing at pace, and a
huge stimulus package is adding to household savings that were already elevated thanks to Equities Week ago YTD Year ago Bond spreads 19/03 Week ago YTD Year ago
the generosity of fiscal support last year. The Fed now expects that the US economy will grow MSCI Europe 0.1 6.2 47.1 Global IG 98 0 -2 -193
by 6.5% in 2021. But while growth is likely to be strong as the economy reopens, how DAX 1.9 7.7 71.6 EMBIG (USD) 316 -10 -7 -318
transitory any rise in inflation proves to be is uncertain, and so the markets’ focus on the 387 4 -22 -707
CAC 40 -0.8 8.2 59.2 Global High Yld
Fed’s reaction to economic developments is likely to intensify and may lead to heightened
volatility in Treasury markets. Investors can take comfort however, that should markets IBEX -1.7 5.6 37.2 Bond yields (10 yr)
become disorderly then the Fed would likely take action to maintain favourable financial FTSE MIB 0.4 9.2 59.9 UK 0.84 2 64 4
conditions and keep the economy on the path to full employment.
FTSE 100 -0.7 4.8 34.1 Germany -0.29 1 29 -11
Markets expect two Fed hikes by the end of 2023
% Fed funds rate and market expectations S&P 500 -0.7 4.5 65.2 USA 1.72 10 81 60
7 TOPIX 3.1 11.6 60.6 Japan 0.11 0 9 3
Federal funds rate MSCI EM -0.9 5.0 70.6 EMD* (local fx) 4.94 7 72 -114
6
MSCI China -0.4 3.6 62.7 Commodities Change (%)
Market expectations on 18 March 2021 (mean)
5 MSCI Brazil 1.6 -2.5 69.2 Brent $/bbl 65 -6.8 24.6 126.7
MSCI AC World -0.4 5.1 63.6 Gold $/oz 1735 1.8 -8.1 17.7
4 Energy -5.4 19.5 79.0 Copper $/lb 4.12 -0.5 17.3 87.4
3 Materials -1.5 7.1 83.1 Currency Level
Industrials -0.2 8.0 72.6 $ per € 1.19 1.19 1.22 1.07
2 Cons discr. 0.3 4.2 93.2 £ per € 0.86 0.86 0.90 0.92
1 Cons staples 0.8 -1.2 22.3 $ per £ 1.39 1.39 1.37 1.17
Healthcare 0.9 0.8 37.8 ¥ per € 130 130 126 118
0 Financials -0.6 13.1 64.6 ¥ per $ 109 109 103 110
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26
Technology -1.1 0.7 82.7 CHF per € 1.11 1.11 1.08 1.05
Source: Bloomberg, US Federal Reserve, J.P. Morgan Asset Management. Market expectations are
calculated using OIS forwards. Data as of 18 March 2021. Telecom svc 0.0 9.1 67.2
Volatility (%)
The week ahead Utilities 0.3 -0.7 25.2
VIX 21 21 23 72
Days Country Event Period Survey Prior Value -0.1 9.6 57.7
Mon Japan Leading index Jan - 99.1 Growth -0.8 0.7 67.9
Tue UK Unemployment rate Jan - 5.1% 4-week Macro GDP (%)† CPI (%) Valuation Fwd P/E
Wed US PMI manufacturing Mar 59.5 58.6
moving
Euro PMI manufacturing Mar - 57.9 Eurozone -2.6 0.9 MSCI Europe 17.1
UK PMI manufacturing Mar - 55.1 Fund flows ($bn) w/e 12/03 w/e 05/03 avg. 4.0 0.7 14.4
UK FTSE 100
Japan PMI manufacturing Mar - 51.4 Equity 1.7 -13.9 -7.1 US 4.1 1.7 S&P 500 21.7
US PMI services Mar 60.0 59.8 Fixed income 3.5 15.0 11.5 Japan 11.7 -0.4 MSCI EM 15.3
Euro PMI services Mar - 45.7 Money market 29.7 18.5 18.8 China 10.8 -0.2 MSCI World 20.2
UK PMI services Mar - 49.5
Euro Consumer confidence Mar - -14.8
UK CPI (y/y) Feb - 0.7% Note: All index returns are total returns in local currency. Fund flows are for US-domiciled funds only,
excluding ETFs. *Term = index duration. †GDP q/q seasonally adjusted annual rate.
Fri UK Retail sales excl. fuel (y/y) Feb - -3.8%
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The Weekly Brief
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0903c02a81fb9234

Unless otherwise stated, all data is as of 19/03/2021. Economic releases: Bloomberg.

Equities: All data represents total returns for the stated period.
Fund flows: ICI.
Bond Yields: JPMorgan EMBIG OAS over Treasuries ; Barclays Global Aggregate Corporate OAS; Barclays Global High Yield OAS; Government bond yields: Source: Tullett Prebon Information, UK Government Bonds 10 Year Note Generic Bid Yield; German Government Bonds 10
Year Debencher; Japan 10 Year Bond Benchmark; US Generic Government 10 Year Yield.
Commodities: WTI and Brent are the crude oil price in $ per barrel, gold is $ per troy ounce, copper is $ per pound.
Rates: Bank of England Official Bank Rate; ECB Minimum Bid Refinancing Rate 1 Week; Federal Funds Target Rate; Bank of Japan Target Rate of Unsecured Overnight Call Rate; Bank of China 1 Year Best Lending Rate.
Macro: Headline CPI year on year percentage change; GDP growth quarter on quarter seasonally adjusted annualised rate.