The global economic recovery continued through March with more evidence of improving industrial activity and commerce. US retail sales recorded their second-largest rise in since 1992, and manufacturing expanded by an almost four-decade high. Positive economic developments saw markets pricing in a return of inflation. Even the external shock of Archegos Capital Management’s stock sell-off late in the month was most notable in its failure to disrupt markets structurally. Rising US treasury yields, reflecting expectations that interest rates would respond to the accelerating recovery, were contained by the Federal Reserve’s communications. The US central bank reminded investors that it is focused on the real economy, jobless rates and average inflation targeting and sees no reason to raise rates before 2023.

When fear grips investors, the market can appear to be full of phantoms and poltergeists. As an explosive 2021 reaches another volatile cross-roads, investors have a lot to contend with – spiking treasury yields, ructions in the tech market, and a yet unresolved global pandemic. In times of upheaval or economic disruption, investors, directed by deep-wired psychological conditioning, are often led to exaggerate and extrapolate trends for future events. On the current extreme pole of anxiety, some investors are concerned newly elected President Biden’s fiscal largess could unleash the dreaded return of proper inflation in the West’s foremost economic stronghold.

Staggering spikes in Covid-19 cases, all too expected Brexit disruptions and shocking anti-democratic developments in the US kicked off 2021 with a bang. From a different vantage point, however, the beginning of 2021 can be seen as positive. Vaccines roll-outs are bringing us closer to the end of the pandemic, uncertainty around Brexit is over and a Democrat majority in the US Senate will enable enhanced fiscal support.