Global Markets Update – Monday 15 February 2021


Global stocks, as measured by the FTSE All-World index reached a fresh record high, while bond yields rose modestly.

Bitcoin climbed to a record high after Elon Musk’s electric carmaker Tesla bought $1.5bn of the cryptocurrency.


The FTSE 100 gained 1.5% over the week.

The UK economy proved more resilient than many had expected at the end of 2020, with GDP expanding by a stronger-than-expected 1% in the fourth quarter, helped by a 1.2% expansion in December alone. While the economy posted its worst annual performance in 300 years in 2020, with GDP contracting 9.9%, economists predict a hefty rebound later in 2021 as the rollout of vaccines helps the economy to reopen.

Consumer spending fell 16.3% in January compared to the same month in 2020, the largest drop since May.


The S&P 500 rose 0.9% over the week, closing the week at a fresh high.

Janet Yellen, US Treasury secretary, urged lawmakers to pass Joe Biden’s $1.9 trillion fiscal stimulus package, arguing that the biggest economic risk was not doing enough to help small businesses and the unemployed. Mrs Yellen predicted that the US could reach full employment next year if Congress passes the stimulus package.

The US reported fewer than 100,000 new daily COVID-19 cases for the first time in more than three months.

Headline US consumer prices rose 0.3% over the month of January, taking the year-on-year increase to 1.4%. Core consumer prices were flat in January, missing economists’ expectations for a 0.2% increase, and taking the year-on-year increase to 1.4%. Meanwhile, the core personal consumption expenditures index, the Fed’s preferred measure of inflation, came in at 1.5% in December.


The FTSEurofirst 300 rallied 1.2% over the week.

The European Commission forecast that eurozone output would return to its pre-pandemic level earlier than previously expected. Eurozone GDP is expected to expand 3.8% in both 2021 and 2022.

German exports rose 2.7% year on year in December.

Former ECB president Mario Draghi will be Italy’s next prime minister. Mr Draghi managed to form a national unity government, having won the backing of almost every large political party.


The Nikkei 225 jumped 2.6% over the week, hitting its highest level since August 1990. Meanwhile, the Topix hit its highest level since June 1991.

Pacific Basin

China’s producer price index rose 0.3% in January compared to a year earlier, the first such increase since the start of the pandemic.

Emerging Markets

Brazil voted to grant autonomy to the central bank. The move should remove the risk of political interference in monetary policy.

Argentina’s largest oil company YPF will avoid defaulting on $6.2bn of debt after reaching an agreement with its creditors.


Long-dated US bond yields rose and the yield curve steepened after Fed chair Jay Powell reiterated the importance of “patiently accommodative” monetary policy to boost the pandemic-ridden US labour market. The yield on the 10-year US Treasury bond closed the week at 1.19%, a rise of 5bps over the week, while the yield on the 30-year bond rose above 2.0% for the first time in a year. However, the yield curve steepened as the yield on the two-year note slipped briefly below 0.1% for the first time on record. The US 10-year breakeven rate inched higher to about 2.2%.

The yield on the 10-year German Bund ended the week at -0.43%, a rise of 2bps over the week. Italian bonds on the prospect of a national unity government in Rome led by former ECB president Mario Draghi. The yield on the 10-year Italian bond fell to a record low of 0.42% during the week.

The yield on the overall US junk bond market moved below 4% for the first time on record. In the triple-C rated part of the market, yields have fallen to an all-time low of just above 7%.


Brent crude rose to just above $62 a barrel, its highest level since January 2020.

Gold was supported by buying from investors as a hedge against inflationary pressures.

Image by Gerd Altmann from Pixabay