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The markets lack ideas - what to do?

12 / May / 21 Bunsi Shakiramal Visitors: 212 Rating: ★★★★★

At the beginning of the week, world markets could not determine the direction of further movement against a contradictory external background.

On the one hand, they are supported by the expectation of a global economic recovery. The active distribution of the vaccine in the United States gives hope for a victory over the pandemic, the transition of the country's economy to its usual course and its active recovery. This factor contributes to purchases in risky assets, even despite the difficulties with the coronavirus in Europe, where governments were forced to tighten quarantine restrictions amid the start of the third wave of the pandemic. However, this factor does not even affect European indices.

On the other hand, investors are closely watching the renewed growth in US Treasury yields, which again reached more than a year highs set last week. Growth in inflationary expectations and bond yields, despite all the assurances of the FRS representatives about maintaining a soft monetary policy and quantitative easing programs for a long time, make investors think about a possible earlier tightening of monetary policy in the United States. This, at least, restrains purchases, and as a maximum, it contributes to profit-taking on long positions in overheated markets.

At the same time, investors are awaiting news on a new stimulus plan for the US economy aimed at infrastructure, which President Biden is to present on Wednesday. This may be another reason for improving investors' expectations on the dynamics of the American and global economies. But at the same time, it represents additional costs, which means it will support the growth of inflationary expectations.

If we talk about the mood on the markets on Tuesday morning, they can be described as moderately positive. Asian sites are showing an upward trend, adding within 1.7%. Key US index futures are consolidating above Monday's closing levels. The nearest futures for Brent crude oil is down 0.2%, retreating to the area of $ 64.8 per barrel. Note that during the session the attention of investors will be attracted by the publication of data on the consumer confidence index in the US.

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