John Hancock: Weekly Market Recap Week Ended March 19th
The U.S. Federal Reserve upgraded its economic growth outlook as well as its inflation forecast, although it reiterated its expectations that it will keep interest rates at ultralow levels well into the future. In fact, a majority of Fed members expects to see short-term rates stay near zero through 2023.
YTD yield surge
Inflation concerns continued to weigh on bond prices, pushing the yield of the 10-year U.S. Treasury bond above 1.70% for the first time since January 2020. At the end of last year, the yield was just 0.92%.
Although the U.S. stock market has recently seen some significant daily moves, a measure of investors’ expectations of short-term volatility has slipped to the lowest level in about 13 months. On Wednesday, the Cboe Volatility Index closed at 19.2—the lowest since the pandemic triggered a spike in volatility.
Oil loses traction
The price of U.S. crude oil tumbled about 8% on Thursday—the commodity’s biggest single-day decline in about six months—before rebounding modestly on Friday back above $61 per barrel. Thursday’s decline came amid new data showing abundant global oil supplies and concerns that oil demand in Europe could falter amid a bumpy rollout for COVID-19 vaccinations there.