FROM THE GLOBAL ASSET ALLOCATION TEAM
- By Candice Bangsund, Vice President and Portfolio Manager, Global Asset Allocation
The reflationary trade gathered some notable momentum in February as investors braced for massive US fiscal spending, which emboldened calls for a sharp revival in growth as global vaccinations accelerated and coronavirus infections receded. However, good news on the economic-front translated into some bad news for stock markets as investors contemplated the effects higher bond yields on the sustainability of the economic recovery, the outlook for corporate profits, and the record-breaking equity market rally. Investor enthusiasm faded somewhat on fears that faster growth and inflation could trigger a pullback in monetary stimulus, even after central bank officials reinforced their unrelenting support and stressed that there are no plans to tighten policy prematurely.