Expectations of a strong economic recovery and looser fiscal and monetary policy in the United States pushed yields on the safe-haven U.S., German, and UK government bonds higher, with gold also taking a knock.“I think it’s a global reflation trade very much in play, that risk-on positive investor sentiment is still very much with us,” said Derek Halpenny, head of research for global markets at MUFG.
The ZEW investor sentiment index in Germany, Europe’s biggest economy, rose by far more than expected in February on expectations that people will flock back to shops and other retail outlets in the coming six months.Eurozone gross domestic product fell less than initially estimated in the last quarter of 2020, and employment edged higher against the previous three months.
The U.S. dollar index, at 90.242, was mired at a three-week low as growing optimism about recovery sent investors into riskier currencies, including the euro and British pound. “There is a clear sense with rates staying low for some time yet and investor appetite for equities staying strong, we will likely see markets hold up for some time yet,” Milroy told Reuters.