11 March 2021
The MSCI World index finished the month up 2.5% in USD or +1.6% in AUD terms as the recovery rally continued with Covid vaccines rolling out and case numbers continuing to decline.
In a somewhat Goldilocks scenario US Fed Chair Jerome Powell commented that the US economy still has a long way to go before reaching maximum employment and the Fed’s inflation target, so still needs support. Whilst in Europe, it was more mixed as a number of countries were extending lockdowns, there was some support as the European Parliament gave the go ahead for the €750bn Recovery and Resiliency Plan.
Volatility and gold fell, US and European interest rates rose and curves steepened as the market started to price in a more exuberant economic outlook.