The last business day of the week is bringing mixed news to pull the financial markets in opposite directions.
First off, President of the United States Joe Biden gave his first prime-time address last night, which delivered on so many accounts. Biden confirmed that he has signed into law the $1.9 trillion stimulus package, which will soon bring a lot more funds into the economy, especially the sectors that need it the most.
In addition, Biden stated that he is hopeful that the US could overcome the pandemic by Independence Day. His administration is moving well above target in terms of vaccinations; moreover, the President also made more people (such as paramedics, dentists, medical students and more) eligible to administer vaccines and promised more vaccination centers will open in the near future.
Based on Biden’s latest plan, all adults in the United States could get at least one vaccine by May 1.
Needless to say, the hope of a recovery in the US before the end of summer, arguably before any other country in the world, is propelling the US dollar higher today, together with US Treasury bond yields, which have been growing for weeks on this optimism already.
The picture is quite different in Europe. Yesterday the European Central Bank announced that it will be stepping up its bond purchases in order to compensate for the spike in bond yields. In addition, almost the entire continent is currently experiencing a new wave of Covid-19 infections, largely due to the arrival and spread of more contagious variants and the comparatively slow vaccinations.
Both the euro and European stock indices are lower today. What is more, the rally of the dollar is also depressing US stocks as well. We expect all major indices globally to close the week on a negative note.
Other negative news that mainly impacts Europe, at least at the moment, is that vaccinations with the AstraZeneca product have halted in a huge number of countries. The pause came after a few worrisome cases and one death in Austria and Denmark raised concerns over unforeseen side effects from the vaccine. The issue is still being investigated as the complications might not be caused by the vaccine. This problem will slow down the vaccination rate in the EU further.
