Is Reflation Back In Full Swing?

Share on facebook
Share on google
Share on twitter
Share on linkedin

Right now, there is a growing camp of market participants who are calling for the next imminent market crash – and for the less dramatic, calling for a sizeable correction at least.

Some of the reasons given for a potential correction in the reflation trade is concerns about virus mutations and whether current vaccines are effective against them.

There are also concerns about various risk sentiment gauges showing a lot of exuberance.

Then there is also the disconnect between some economic data and asset prices – and those pointing out that valuations in certain metrics are near or have surpassed prior bubble levels.

There is also the Dollar which could get interesting should relative growth dynamics come back into play.

However, despite all that, there are still ample number of positives such as ultra-easy monetary policy, incoming fiscal stimulus, global vaccine rollout, very easy econ data base effects and very easy company earnings comparisons.

The biggest positive might still come into play in the sessions ahead as equity volatility (VIX) has reached very significant levels once again.

With a light calendar in the week ahead, focus will be firmly fixed on overall risk sentiment, with added attention on the VIX and DXY.

Complete our free mini video course

Learn how to trade into and out of economic news releases. Just watch our 10-minute video course and download the eBook.