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Bloomberg
US futures and European stocks climbed on Monday as investors considered the outlook for inflation and vaccine progress.
Travel companies and automakers led the Stoxx 600 Index to the highest level in a year. Danone, the world’s largest yogurt maker, jumped 5% after announcing it would replace its chairman.
Brent crude topped $69 a barrel as economic data from China showed a surge in industrial output, underscoring the strength of its V-shaped
recovery.
Investors remain preoccupied with rising long-term borrowing costs and their implications for reflation trades and the rotation in the stock market from growth to value shares. The benchmark Treasury yield hovered around 1.61% on Monday.
While valuations across equities and credit are elevated, it’s hard not to be positive on risk assets, though “the change of pace in markets last week maybe also suggests a lot is priced already,†Patrik Schowitz, global multi-asset strategist at JPMorgan Asset Management, said in a note.
In the US, investors are also considering the potential impact of higher taxes and how that could hit corporate profits. President Joe Biden is planning the first major federal tax hike since 1993 to help pay for a long-term economic program, according to people familiar with the matter. The White House is expected to propose a suite of tax increases, mostly mirroring Biden’s 2020 campaign proposals, according to four people familiar with the
discussions.
In an interview on Sunday, Treasury Secretary Janet Yellen said US inflation risks remain subdued. A strong recovery from the Covid-19 recession is likely to prompt Fed Chair Jerome Powell and his colleagues to lift interest rates in 2023, but that isn’t going to show up in their forecasts this week, a Bloomberg survey of economists showed.