US Stocks Edge Lower While Bonds Extend Losses

US stocks finished mostly lower as benchmark Treasury yields climbed to the highest levels in a year, renewing concern that rising borrowing costs and price pressures could derail the economic recovery. The S&P 500 fell by 0.19% to 3,906.71 while Dow Jones was up 0.98 points to 31,494.32.

Fed Says Policy Providing ‘powerful Support’ to US Economy

Federal Reserve actions will continue to bolster the US economy as it battles the Covid-19 pandemic, the central bank said in its twice-yearly update to Congress. “Monetary policy will continue to deliver powerful support to the economy until the recovery is complete,” the Fed said. On an optimistic note, the Fed said data show a pickup in employment through early February in the leisure and hospitality sector.

G-7 Leaders Pledge Continued Fiscal Support for Economies

Leaders of the Group of Seven industrialized nations pledged to sustain government spending to help economies recover from the coronavirus pandemic as they attempted to start a new chapter in multilateral cooperation. “We will continue to support our economies to protect jobs and support a strong, sustainable, balanced and inclusive recovery,” the G-7 said in a statement published after the call.

BOE’s Vlieghe Gives Strongest Backing Yet for Negative Rates

Bank of England (BOE) policy maker Gertjan Vlieghe gave his strongest backing yet for the use of negative interest rates if the UK needs more stimulus, highlighting a growing schism between officials on the institution’s toolkit. Two days after Deputy Governor Dave Ramsden said the BOE had scope for more quantitative easing to support the economy, his colleague on the Monetary Policy Committee contended that there’s “little QE can do to add further stimulus to the economy.”

UK Retail Sales Plunge More Than Expected in January Lockdown

UK retail sales fell more than twice as fast as expected in January as the latest national lockdown closed stores in what’s traditionally a busy period with post-holiday discounts. Sales in shops and online fell 8.2% after posting a small increase in December, the Office for National Statistics said. It was worse than the lowest forecast and the third consecutive downside surprise.

Japan Cuts Its Assessment of the Economy Amid Emergency

Japan’s government cut its assessment of the economy for the first time in 10 months, as the country struggles through a renewed state of emergency to respond to a winter jump in coronavirus cases. In its monthly report for February, the Cabinet Office continued to describe overall conditions as improving from a severely low base, but said consumer spending was weakening again.

Taiwan Sounds Warning on Currency as Exports Soar on Chip Demand

Taiwan more than doubled its forecast for export growth this year, but sounded a warning that the global scramble for computer chips is going to add further upward pressure on the local dollar. Exports will likely rise 9.58% this year, compared with a previous estimate of 4.59%, the statistics bureau said. Gross domestic product may expand 4.64%, more than previously expected and up from a revised 3.11% in 2020.

Crude Slides With Texas Oil Wells Seen Restarting Output

Oil fell to the lowest in a week as output slowly resumed in Texas, while margins for processing gasoline surged as Gulf Coast refineries are seen taking weeks to restart operations after the deep freeze. Brent crude for April settlement slipped US$1.02 to US$62.91 per barrel.

Source: Affin Hwang Research - 22 Feb 2021