Week in review

• Australia’s unemployment rate falls to 6.4%
• U.S. retail sales very strong at 5.3% m/m
• Preliminary Australian retail sales increase by 10.7% y/y

Week ahead

• U.S. consumer confidence
• Australia capital expenditure for 4Q 2020
• Australia private sector credit for January

Thought of the week

The British pound reached a three year high last week as sentiment was lifted in response to declining COVID-19 cases and rising vaccination rates. Once again its been proven the restricting the mobility of a population curtails the spread of the virus. The questions is always what happens when those restrictions are removed? With an increasing share of the population having received at least part of a vaccination the should be fewer cases as the UK economy re-opens. Contrast this with the continental Europe. Case numbers are falling there too but the roll-out of vaccinations has been much slower (see chart) so a lifting of restrictions could see a another spike in cases. The effectiveness of the current suite of vaccines against all COVID-19 strains remains the biggest risk to the quite rosy economic and market outlook globally, not inflation. Inflation rates will move higher but are unlikely to be troubling for central banks anytime soon.

People who have received at least one dose of vaccine

% of population

Source: Our World in Data J.P. Morgan Asset Management. Data reflect most recently available as of 17/02/21.
All returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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