After a choppy first quarter of the year, risk assets have started the second quarter with a bang as major equity futures printed fresh all-time highs.
With month-end and quarter-end flows now out of the way, the market is turning its attention to the highly anticipated second quarter of 2021.
Risk assets got a shot in the arm at the latter part of last week, as the concerns about month-end and quarter-end rebalancing ran its course, and with the stellar economic data points from the US.
ISM Mfg PMI printed at its highest number since 1984 – and NFP on Friday showed that the US added almost a million jobs in March, which was much higher than the consensus expectations of just over 600K.
Apart from the data, the world is making progress in the fight against Covid, as total world vaccinations stood at close to 670 million with data updated until the 4th of April.
To add to the upbeat expectations for Q2 is the ongoing fiscal support from the US government. With the dust barely settled on the newly approved $1.9 trillion stimulus bill, the Biden administration has announced plans for the next $2.2 trillion infrastructure package.
In summary – there are many reasons to be positive right now. With a very quiet week ahead in terms of economic data, that might be all that risk assets need to continue the path of least resistance, which remains firmly titled to the upside.
Highlights of the video:
00:41 – Current Baseline
06:34 – Baseline expectations for the upcoming week
10:32 – Sentiment Shifts & Trade Plan