Markets began the week on a positive not, booking big gains in equities from the previous week and enjoying a general rise in confidence as economies re-open. The roll-out of the vaccine, enabling much of the re-opening, has come under pressure over the weekend. European countries, including Ireland, France, Germany and the Netherlands have suspended the AstraZeneca vaccine, due to complications around blood-clotting. This could develop into a major disruption to the vaccination process and the economic recovery.
Markets will focus on Central Banks, monetary policy and adjustments to combat the rise in interest rates. The US 10 Year Bond has pushed back above 1.6% and remains a threat to the equity rally and a warning to Central Banks that there is such a thing as inflation. The FOMC meet this week and will be closely followed by the Bank of England and the Bank of Japan. They are all likely to leave monetary policy and QE in place, while jaw-boning the narrative. The RBA minutes will be released today and should reveal the new war of words on rising interest rates.
The suspension of AstraZeneca stalled the rebound in European currencies, with the EUR sliding back to 1.1930, while the GBP drifted to trade below 1.3900. Chinese economic data, including Unemployment, Retail Sales and Industrial Production also confirmed the strong economic rebound. This supported the trade exposed commodity currencies, with the NZD pushing back towards 0.7200, while the AUD trades 0.7740.
Look for the RBA minutes in local trade, the AstraZeneca suspensions/fallout in Europe and Bond Yields to drive markets today.