The Covid-19 pandemic cost the European accommodation industry EUR115bn in lost turnover in 2020 following stringent restrictions on leisure and business travel. A stronger summer season helped France and Germany see annual turnover slide by “only” -43% and -44% compared to -53%, -61% and -64% for the UK, Italy and Spain, respectively.
With policymakers’ focus coming back to financial stability, Chinese stimulus will not be saving the global economy this time round. But expect monetary tightening through liquidity and regulation, rather than policy rate hikes, in 2021.
The reflation trade that has engulfed capital markets is largely based on the idea that a lot of money has been, is and will be created in response to the Covid-19 pandemic.
With oil leading the recent surge, some commodities are at multi-year record highs, in line with anticipated pent-up demand. Since the lows of May 2020, corn, soybeans and copper are at seven to eight-year highs, while cotton is trading at a three-year high.
Bond vigilantes are testing the Fed on tapering. Against the backdrop of growing confidence in the global recovery and rising inflationary pressures, yields on 10-year US Treasuries have risen 60bp since the beginning of the year to 1.4%.