The reflation trade took hold. Commodities prices increased, government bond prices fell with yields moving decisively higher, and within equities, value outperformed growth.
The most dramatic move was the jump in the 10 Year US Treasury yield to 1.5 per cent, its highest since February last year. There has been a decisive shift in the prevailing mood of the market. The predominant concern is no longer sluggish economic growth and deflation. Confidence is growing that the recovery will be robust, and the main question is over inflation. Might the Federal Reserve be forced into tightening policy earlier than currently indicated? Of course, I don't have the answer, but it seems likely that the trend of the first two months of 2021 has further to run. Inflationary fears will be stoked by further "stimulus checks" in the US. Rising commodity prices are also likely to feed through to higher inflation.
Brent Crude was up a further 17 per cent to $64.50 per barrel and back to pre-pandemic levels in commodity markets. Copper was up 15 per cent, to its highest in over 10 years. Zinc, nickel and platinum were also in demand, but the prize went to platinum group metal, rhodium, which was up 37 per cent, extending its gain this year to 65 per cent.