The MSCI Global Equity Index and the European STOXX 600 Index rose 0.3% to record highs, supported by the prospect of a widespread economic recovery after COVID-19 and anticipation of monetary policy accommodative on the part of central banks.

Bets on the recovery also propelled oil to the highs of May 2019. [O/R]

Futures on the S&P 500 meanwhile rose 0.1%, with investors apparently viewing higher-than-expected US inflation data and soaring factory prices in China as temporary or manageable.

Goldman Sachs economists said fears that rising inflation would derail the market recovery or lead to significantly higher bond yields were likely misplaced.

“The rally right now looks cautiously optimistic. The reality is that I think it will continue to climb slowly as we continue to see decent data supporting the argument,” said John Woolfitt, director of Atlantic Capital in London .

Yields on 10-year US Treasuries stood at 1.4619% as investors seemed to relax amid fears of inflation, which spooked rates in late March. [US/]

“This is getting painful for bond bears and I bet the 10-year yield will drop to 1.25% or even 1%,” said Akira Takei, fund manager at Asset Management One, noting that the US economic recovery is expected to slow to come months.

Speculators’ net long positions in U.S. bond futures reached their highest level since October 2017, according to data from the U.S. financial watchdog.

Many investors expect the Fed to repeat its conciliatory stance at its two-day meeting starting on Tuesday.

“The focus is not on monetary policy. It is more about talking about reducing bond purchases, as the demand for liquidity in the US economy begins to slow,” said Paul Donovan, UBS Global Wealth Management chief economist, in a statement. note to customers.

Asian markets were quieter with China, Hong Kong and Australia shutting down for holidays. Japan’s Nikkei rose 0.7%, while the MSCI’s largest Asia-Pacific stock index outside of Japan fell 0.2%.

The wider markets largely ignored the weekend’s G7 meeting, which berated China for human rights in its Xinjiang region, called on Hong Kong to retain a high degree of autonomy and demanded a full and in-depth investigation into the origins of the coronavirus in China.

“The meeting reminded us that Sino-US tensions do not go away. The meeting reminded us that Brexit never goes away,” Donovan added.

GENERAL BITCOIN

In currencies, the euro lost momentum after the European Central Bank last week showed no willingness to cut its stimulus measures and traded at $ 1.2109, after falling to a low month to $ 1.2093 Friday. [FRX/]

The yen was little changed at 109.68 yen, while the British pound changed hands at $ 1.4108, near the low end of its trading range over the past month.

Bitcoin held onto the gains from the weekend, when Elon Musk signaled Tesla’s possible resumption of trading using the token. It was last purchased for $ 39,267.

(Chart: Fed BS vs. VIX –

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(Reporting by Thyagaraju Adinarayan in London and Hideyuki Sano in Tokyo. Additional reporting by Tom Westbrook in Singapore; Editing by Jacqueline Wong and Alexander Smith and Chizu Nomiyama)

By Thyagaraju Adinarayan and Hideyuki Sano