Weekly Market Recap
This is not an exit
Week in review
- RBA starts to taper bond purchases, lowering to $4bn per week
- ECB plans to taper emergency purchases from €80bn to €60bn
- U.S. job openings reach new high at 10.9 million
- Australia business and consumer confidence
- Australia labour market report
- U.S. CPI inflation
Thought of the week
Momentum in global growth has unexpectedly softened in recent months. Persistent supply chain disruptions are hampering production, slowing spending and delaying inventory restocking. Drags in the shipping industry are exacerbating these bottlenecks. Meanwhile, concerns around COVID-19 cases are weighing on the service sector recovery. Despite the concerns about the moderation in global activity, central banks are lining up to exit from super-loose monetary policy and ballooning balance sheets. Doing so in the current climate makes communication a challenge with many central banks opting for a ‘dovish taper’ approach. This involves starting the process of policy normalisation in an ever so gradual manner, best illustrated by the RBA’s elongated tapering of its bond purchases announced last week. The current slowing in the economy will be temporary and central banks will be eager to begin the very slow journey back to normal settings.
Central bank balance sheets
% of nominal GDP
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