Global equities started the year in the same bullish manner that drove markets to record highs at the end of 2020. European indices added another 2.0% throughout the first three weeks of the year, marginally outperforming the US, with financials and pharmaceuticals gaining as tech lagged. Investor sentiment continues to remain positive, with optimism for a strong rebound in the global economy in 2021 still high, as governments and central banks show little sign of scaling back their supportive rhetoric.

Risk markets were buoyed by the Democrats taking control of the Senate for the first time in six years, adding conviction to the President-elect’s ability to push through a more generous economic rescue package. Mr Biden now hopes that a Democrat-led Congress will be able to pass a new $1.9tn programme in order to support household spending, state and local governments and the unemployed. The US economy lost 140,000 jobs in December with the unemployment rate remaining stubbornly high at 6.7%. The package will see every American who earns less than $75,000, receive a one-off $2,000 payment. The confirmation of the blue sweep across The Capitol saw 10-year treasury yields rise from 0.91% at the start of the year to as high as 1.18%. The new package is set to come solely from new debt issuance which has put pressure on the US dollar with speculative bets against the dollar now building up to their highest level in nearly three years.

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