June 2021 Global Market Commentary
The second quarter of 2021 saw equity markets rise as COVID-19 vaccine distribution progressed and COVID-19 related restrictions were gradually lifted in the US and Europe.
The quick rebound in various economies has fueled a rise in inflation, as seen in the US consumer price index, which rose 5% year-over-year.
The Federal Reserve, and many market participants view this inflation as transitory and fueled by supply chain related issues; shortages in new home constructions and automobiles have led to a housing boom and a spike in used car prices which are skewing inflation readings to the upside.
Though it reiterated its accommodative stance on monetary policy, the meeting minutes revealed the Federal Reserve has begun discussing tapering asset purchases, which will likely create some anxiety in markets as assets reprice according to potentially higher interest rates.
Despite rising concerns around the COVID-19 Delta variant, preliminary data has shown efficacy in vaccines’ protecting against this new strain and not impeding the reopening of the economy in areas like the U.S. and Europe, though rates of vaccinations are slower in emerging markets, likely weighing on their market performance in the short term.