March was another strong month for risk assets, particularly in the U.S. as vaccine manufacturing and distribution ramped up. Loosening COVID restrictions coupled with the new $1.9 trillion stimulus bill supported increased business activity and rising inflation expectations.
While trading frenzies and short selling in equities dominated headlines in January, the bond market, specifically the U.S. Treasury market, stepped into the spotlight in February. Optimism around more stimulus coupled with economic reopening supported higher inflation expectations, which put upward pressure on Treasury yields.
Despite entering 2021 with elevated long-term valuations, near term financial market conditions remained favorable for risk assets.
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