Economy and markets: analysis
If the first phase of the recovery of the world economy was Chinese, the first half of 2021 was marked by the dynamism of the American economy, boosted by budget support (more than 20 percentage points of GDP injected to date).

In Europe, a third epidemic wave forced governments to adopt new constraints in early 2021, sometimes harsher than during the 1st confinement as in Germany. Euro zone GDP thus contracted in the first quarter. However, under the effect of the improvement in the health situation and the development of vaccination campaigns, a gradual reopening then began. The business climate in services thus improved markedly in May and June in the euro area. He has also maintained a very high level in the industry, which is being driven by the global economic recovery. The latter has also resulted in tensions on the prices of raw materials and supply constraints (especially in semiconductors).


In the United States, inflation accelerated significantly (5% over one year in May). In addition to a base effect on the price of oil, marked but undoubtedly partly reversible price increases have occurred for certain products (used cars in particular). In the euro zone, inflation was significantly lower (around 2% over one year in May and June and around 1% excluding energy and food products). Driven by the recovery in the US economy and the outlook for accelerating inflation, US long rates began to recover in late 2020, after hitting a low of slightly above 0.5% in August 2020 The 10-year rate rose significantly until the end of March to reach 1.75%. But this movement was delayed in the 2nd quarter, investors seeming to be convinced of the transitory nature of the inflationary surge.
It thus came back to around 1.5% at the end of June. A first hike in the Fed's key rate is expected in 2023, but monetary normalization should be gradual. The same should be true for the ECB with the difference that a hike in the key rate is not expected for several years. In fact, the ECB increased its asset purchases a little in the spring in order to calm the upward pressure that was beginning to exert on European rates. The yield on the 10-year OAT, which ended 2020 in negative territory, was around 0.15% at the end of June.
 The bullish movement of the stock markets that began in the summer of 2020 continued overall in the first half of 2021, despite hesitation linked to the emergence of a third wave in Europe and health difficulties in some emerging countries. The new budget support measures adopted in the United States and the rapid development of vaccination campaigns have been two powerful catalysts. On the microeconomic level, the good results of companies in the 1st quarter, in the United States but also in Europe, also played a role. Long behind their American counterparts, European indices have recovered with the prospect of an improvement in the health and economic situation. Ending the month of June at 6,516 points, the CAC 40 posted an increase of 17.7% in the first half of 2021, more than compensating for the decline in 2020.

All the more so in such a special context, it is important to regularly ensure that your investment strategy is still suited to your needs and does not require certain adjustments.

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