• Vince

Overheating of the global economy caught central banks' attention, US stocks and Cryptos plummet

European markets were cheered last night after UK Prime Minister Johnson announced a staged removal of lockdown restrictions through to June 21, with global vaccinations running at closer to twice the 122m of global confirmed cases. Supporting sentiment were the prospect of more fiscal stimulus, with Congressional Democrats remaining on track to push through Biden’s USD1.9tr stimulus package before the March 14 expiration of unemployment insurance benefits, despite widespread Republican opposition. The stimulus package is set to pass through the House at the end of this week and in the Senate a week later.

Central bankers have tried their best to douse fears that the global economy is overheating. Yields retraced earlier gains after ECB President Lagarde warned the ECB will be “closely monitoring” yields with the ECB pledging to keep financing conditions favourable. Last night Fed Chair Powell signalled the US economy is still very far from its employment and inflation objectives. The Fed was a long way away from considering the withdrawal of monetary support, maintaining its USD120bn monthly QE programme until “substantial further progress” has been made. Powell downplayed inflationary concerns calling the recent back-up in global yields “a statement of confidence” in the outlook. Comments by Bank of Canada Governor Macklem this morning was from the same central bank script.