A look at the day ahead from Danilo Masoni. Covid-19 contagion rates are falling steadily, central bankers are making soothing noises, economic data looks robust and vaccination campaigns are proceeding. And bond markets too have calmed, with the U.S. 10-year Treasury yield even dipping under 1.4%, well off last week’s peaks above 1.61%.
No wonder, world stocks are marching back toward peak levels. After a positive session in Asia, European and U.S. futures are both heading north, up 0.5-0.9%.
We get another snapshot of the world economy from final PMI figures in a range of countries but advance readings have looked good. Australia’s GDP data smashed estimates by expanding 3.1% in Q4. And while Chinese services sector activity grew at its slowest pace in 10 months, it remained above the 50-mark separating growth from contraction.
As demand for safe-havens abated, the U.S. dollar slipped from near one-month highs. Commodity currencies such as the Aussie dollar and Norwegian crown benefited, building on the chunky gains of the past two days.
Central bankers will another chance to dissipate any fears over inflation or the timing for tapering stimulus, with Fed’s Bostic and ECB’s de Guindos among those due to speak.
Finally the UK budget. Will British finance minister Rishi Sunak choose to enlarge budget holes or seek to fill them? Probably a mix. Goldman Sachs analysts are among those who see recent his hawkish tone as political positioning. They anticipate 60 billion pounds in fiscal stimulus.
Key developments that should provide more direction to markets on Wednesday:
* The U.S. will have enough COVID-19 vaccine for every adult by the end of May, President Joe Biden said
* Final services PMI
* Euro zone PPI
* Poland’s central bank meeting
* UK budget
* US ADP employment
* Fed speakers: Atlanta Fed’s Raphael Bostic 1900 GMT; Philadelphia President Patrick Harker 1500 GMT; Chicago Fed’s Charles Evans; Dallas Fed’s Rob Kaplan 2300 GMT
* ECB speakers: Board member Fabio Panetta 1300 GMT; Vice President Luis de Guindos 1500 GMT; ECB board member Isabel Schnabel 1930 GMT
* BOE speakers: board member Silvana Tenreyro 1600 GMT
Reporting by Danilo Masoni