On Thursday, Global equities reached new heights and Treasuries rallied sharply. This was due to the release of upbeat US economic data and reassurances from the Federal Reserve, that assured public that it will continue with its accommodative stance to support the financial markets.
It was reported that in March Retail sales had risen by the most in 10 months while the number of Americans filing for new unemployment benefits fell sharply by 193,000 last week to 576,000. Optimism prevails in the market as the recent filing has emphatically beaten economists’ grim expectations for 700,000 new claims.
Additionally, further progress on the recovery front helped push US stocks higher. Thus it is to be noted that the US stocks climbed higher on Thursday, 15 April 2021, with the S&P 500, the Nasdaq composite index down, and the Dow Jones Industrial Average all finishing at high fresh records, supported by better-than-expected retail sales and weekly jobless claims.
Reportedly, to put the stock market change in numbers, S&P 500 recorded a rise of 1.1 per cent which took the stock market indices to new highs. The tech-focused Nasdaq Composite gained 1.3 per cent, fueled in part by strong quarterly results. The FTSE All-World index of developed and emerging market equities rose 0.8 percent to a record.
US government debt rallied sharply alongside the upswing in stocks, with the yield on the 10-year US Treasury sliding 0.1 percentage points at one point to 1.53 per cent. It later edged back to 1.55 per cent, marking the steepest daily drop since February.
It is to be noted that most of sectors advanced, in which growth was led by the real estate, health care, information technology and communication services sectors. Additionally, Financial shares declined with yields falling, even after Citigroup Inc. and Bank of America Corp. posted better-than-forecast trading revenue.
Optimistic views on economic recovery were offered by the Bank of America and Citigroup in their earnings reports on Thursday. But on the contrary, the shares of the second-biggest U. S. lender fell 3% after it posted a profit that just about topped estimates.
Even with the upbeat economic data, the worst isn’t over yet. It is to be noted that most of the analyst eye with concern the rising inflation in the economy.
The NAHB noted an uptick in homebuilder confidence even though builders continued to grapple with rising input prices and supply chain constraints. Additionally, consumers too faced higher home prices due to a lack of inventory.
US Industrial production
Data released by US, states that Industrial Production rebounded by 1.4% in March. To talk about numbers, the Federal Reserve reported on Thursday that US industrial production reportedly jumped by 1.4% in March after plunging by a downwardly revised 2.6% in February.
The increase in industrial production came as manufacturing output surged significantly by 2.7% in March after plummeting by 3.7% in February. While mining output on the hand soared by 5.7% after plummeting by 5.6% in February. Additionally, the Fed also said capacity utilization for the industrial sector rose to 74.4% in March from a downwardly revised 73.4 in February.
US Retail Sales
According to the data released, US Retail Sales Skyrocketed by 9.8% in March. This came after downward trend in retail sales the previous month with a fall of 2.7% in February, according to a report released by the Commerce Department on Thursday.
The strong imputes to the retail sales were imparted by the record motor vehicles and part dealer’s sale in the market, which soared by 15.1% in March after plunging by 3.5% in February. However, even if the rebound in auto sales is excluded, retail sales still spiked by 8.4% in March after tumbling by a revised 2.5% in February.
But it is to be noted that fixed-income investors have expressed some bewilderment by the magnitude of the rally in Treasuries on Thursday, especially given the robust economic data this week. Oliver Blackbourn, a portfolio manager at Janus Henderson stated that “We have been surprised that stronger economic data hasn’t helped to push things higher,”.
After long-dated Treasuries recently posted the worst quarterly performance since 1980, Blackbourn said the market was due for a “breather”. He added that “The market has moved very quickly,”.
Others experts, however, are of the opinion that rising geopolitical tension between Russia and the US and further uncertainty about the vaccine rollout, with the continued pause in the J&J rollout, has further drummed up demand for US government debt.