The big news from last week was the official passage of the $1.9 trillion pandemic stimulus deal. This stimulus will likely jolt economic growth and activity in the coming months. It will also likely end up pushing risk-asset prices higher as a new infusion of liquidity finds its way into the markets. U.S. interest rates remain near their recent highs in advance of this week’s central bank meetings in the U.S., England and Japan.
No rate changes are expected, but markets will closely watch any signals that central bankers will change their accommodative stances on monetary policy if interest rates continue to rise. I expect the dovish commentary to continue as any change in tone will likely not occur until later this year, after the economy returns to a more normal state. In the meantime, I expect stock prices and bond yields to continue to push higher.
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