In almost all the stories there is the good and the bad, sometimes, just as in the famous 1966 film, the ugly is also present. Now the market is going through a phase with one of these stories, more complete. But let’s start with the good, which in this case is the progress of the US economic recovery, that after a 4.3% growth in the last quarter of 2020, we should get to know this Thursday that it accelerated to a growth of 6.9% in the first three months of 2021, undoubtedly the result of the stimulus packages approved at the end of last year, still under Trump’s mandate, and in mid-March this year, with a content already written by Joe Biden and his Democratic partners.
But this “good” scenario brings with it a bad one, which translates into an increase in interest rates on North American treasury bonds and which then translates into additional pressure for the FED to raise its reference rate, not least because it is associated with growth so expressive is inflation expected to rise above the level considered ideal by the central bank. And here comes the ugly, namely what is expected to be the reaction of investors when the FED gives its first indication that it is going to change its monetary policy, which may be the reduction of the asset purchase program, a bit in the style of which was the October 2018 correction, when Wall Street played in Bear market territory.
How the story will unfold is uncertain, however, increased volatility is to be expected when positive economic figures come out and on days of central bank meetings in the coming months.
