The S&P 500 broke above 4,000, for the first time in history, as the US rally in equities extends. The Biden administration announced a $2.25 Trillion Infrastructure Plan, closely following the massive $1.9 Trillion stimulus/bailout bill. These are almost incomprehensible in their sheer magnitude. The markets love the fiscal stimulus, on the day, and it does take the pressure off the Federal Reserve and their massive program of monetary stimulus. The new ‘Modern Monetary Theory’ allows for massive expansion of debt, funded by the Central bank and interest rate suppression via QE Infinity. It works until it doesn’t! Debt in the US has blown through the 100% of GDP of $21 Trillion, which was the ‘tipping point’ back in the GFC!?
In the US markets await the all important Non Farm Payrolls and Unemployment numbers, which will be released on Good Friday, when markets are closed. US Weekly Jobless Claims were higher than expected but the Challenger Jobs report, announced less than expected job cuts. The impact of the Non Farm Payroll number will not be felt until markets re-open, next week. US 10 year Bond yields fell back to 1.68%, releasing pressure on the US Dollar and allowing the EUR to rise to 1.1770, while the GBP traded 1.3825.
The rise in market sentiment was reflected in the Tankan report, which came in at a strong plus 5, complimenting global sentiment. The vaccine and re-opening of global economies is the market focus. Today markets are ignoring the surge in the virus, forcing third and fourth wave lockdowns in Europe and around the world. Commodity currencies gained some relief from the softer reserve, with the AUD trading 0.7615, while the NZD broke back above 0.7000.