- Macro data area improving strongly in the US, with the Euro area lagging behind, but surveys show higher optimism.
- The strong global rebound and higher inflation risks keep upside pressure on yields in both the US and Euro area.
- The Fed has reiterated that it is too early to withdraw monetary support and this may reinforce inflation fears. The acceleration in bond purchases by the ECB has not stopped the rise in bund yields, while inflation remains subdued. This puts the ECB in a difficult situation.
- However, real yields remain under control. This adds to progress on vaccination, ample liquidity and rising earning to maintain our preference for risk assets.