Global stocks edged higher on Monday, driven by optimism surrounding President Joe Biden signing the $1.9 trillion stimulus program into law last week, fuelling investor bets that economic growth will speed up.
Many Americans saw $1,400 stimulus checks landing into their bank accounts over the weekend, while more direct deposits are expected in the coming weeks.
US bond yields drifted at a 13-month peak of 1.6% on Monday ahead of the FOMC announcing its latest monetary policy decision on Wednesday. As markets continue to worry about the pressures of inflation, Treasury Secretary Janet Yellen said over the weekend that US inflation risk remains small and "manageable."
Meanwhile, bitcoin rose above $61,000 over the weekend before pulling back 2% to trade around $58,070 on Monday. The digital token seems to be going through the same market dynamic as all fiat money, where market forces determine its value much more than any kind of clear fundamentals, according to Sergey Nazarov, co-founder of Chainlink.
"If doubt about monetary policy, unchecked money printing and continually rising inflation continues to worry both retail and institutional investors, then they will seek alternatives that provide safety, which Bitcoin provides in a unique digital format," Nazarov said.
In Europe, Germany has declared that a third wave of coronavirus infections have begun while Italy is set to face another lockdown over the Easter weekend, according to CNBC.
A number of European countries had suspended AstraZeneca's vaccine following reports of serious blood clots in recipients. The company said on Sunday there is "no evidence" its vaccine increases blood clot risks.
But optimism over growth and expectations for a spike in inflation this spring have been fueling a reflation trade, with stocks and bond yields both rising, UBS said. "While we expect further market volatility, we think monetary policy will remain accommodative," said Mark Haefele, chief investment officer at UBS Global Wealth Management. "This, along with vaccination rollouts and reopening plans, should support a broadening recovery."
Shares in China dropped despite data showing that activity in its factory and retail sector surged in the first two months of 2021. But dovish comments by Secretary Yellen over the weekend that led US futures higher lent an overall sense of calm to markets in Asia.
Oil too rose on Monday as OPEC's demand forecasts are lending support to prices. The OPEC this year expects demand to rise by 5.9 million to 96.3 million barrels per day, which is more sharply than had been predicted a month ago. Brent Crude rose 0.9% to $69.87 and West Texas Intermediate rose 0.9% to $66.25.