14th June 2021 Morning Report

In the week ahead investors will be focussing on the Federal Reserve’s monetary policy meeting next week as a "Goldilocks" market environment that has helped lift stocks to record highs and tamed a bond selloff is faced by rising inflation.

Stocks now stand at fresh records, with the S&P 500 gain 13% this year and nearly 90% 2020’s March low. U.S. government bonds have also risen after their first-quarter selloff, with the benchmark 10-year Treasury yield at 1.46%, markets are choosing to follow The Federal Reserve’s view that rising inflation is transitory and that the economy is not close to overheating with employment 7.6 million jobs its February 2020 peak. 

However, some investors worry that markets have grown too complacent on inflation and other risks that could derail the current rally such as potentially higher taxes. Some of the biggest banks led by Morgan Stanley, have been warning in recent months that the market is primed for a sharp pullback.

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