US Stocks Edge Higher; Yield Spike Hits Tech

US stocks eked out a record, though rising Treasury yields continued to weigh on technology stocks. The dollar jumped. The S&P 500 rose by 0.10% to 3,943.34 while Dow Jones was up 293.05 points (0.90%) to 32,778.64.

Yellen Says US Inflation Risk Remains Small, ‘manageable’

Treasury Secretary Janet Yellen said US inflation risks remain subdued as the Biden administration pumps US$1.9 trillion in pandemic relief into the economy and a return to full employment comes into view. “Is there a risk of inflation? I think there’s a small risk and I think it’s manageable,” Yellen said. She further said if it materializes, they’ll certainly monitor for it but they have tools to address it.

US Consumer Sentiment Advances to One-year High on Outlook

US consumer sentiment improved in early March 2021 by more than forecast, reaching a one-year high as more vaccinations and fiscal relief boosted optimism in the economic outlook. The University of Michigan said its preliminary consumer sentiment index rose to 83.0 in the first half of this month from a final reading of 76.8 in February 2021.

Bank of England Official Says QE ‘not Ideal’ in the Longer Term

The Bank of England’s main program to stimulate the economy is “not ideal in the long run,” an official overseeing threats to the banking system said. Alex Brazier, the UK central bank’s executive director of financial stability, identified the quantitative easing program as a potential risk. Under the measure, the bank buys bonds in markets to keep a lid on interest rates.

ECB’s Kazaks Says Yield Gains Won’t Always Spur More Bond Buying

The European Central Bank’s faster pace of emergency bond buying to rein in bond yields is a temporary strategy that will only last until the economy is stronger, Governing Council member Martins Kazaks said. “If the economy performs better, it could be possible to provide less support,” Kazaks said. A “rise in yields will need to be accepted. But it should be gradual to avoid premature tightening.”

Indonesia Draft Law Seeks to Limit Central Bank Autonomy

Indonesia is pursuing another attempt at increasing government influence in the decision-making and operations of its central bank, as well as expanding its ability to fund public debt, according to a draft legislation to be discussed in parliament. A finance ministry officer, Yustinus Prastowo, said a draft is in the works.

India FX Reserves Surpass Russia’s to Become World’s 4th Biggest

India’s foreign-exchange reserves surpassed Russia’s to become the world’s fourth largest, as the South Asian nation’s central bank continues to hoard dollars to cushion the economy against any sudden outflows. Reserves for both countries have mostly flattened out this year after months of rapid increase. India’s foreign currency holdings fell by US$4.3 billion to US$580.3 billion as of March 5, the Reserve Bank of India.

Oil Falls for First Week in Two Months With Rally Losing Steam

Oil in London fell for the first week in two months as signals of a patchy demand rebound across the globe and a stronger dollar held back crude’s rally. Brent crude for May settlement rose US$0.36 to US$69.58 per barrel.

Source: Affin Hwang Research - 15 Mar 2021