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%.
As governments race to contain new and more contagious variants of Covid-19, ‘travel passes’ or ‘vaccine passports’ won’t be enough to revive tourism: the industry could only see a recovery in 2024. To determine the pace of recovery after the Covid-19 shock, we look at how long it could take countries to achieve herd immunity and at lessons from past economic slumps.
The recent US equity market rally, which saw some stock prices multiplied by 10x to 15x within a week, highlights the rise of a new kind of “all-in” retail investor, one that is ramping up leveraged trading through the derivatives market, primarily via call options.