Drowning in Dollars: Can Markets Stay Afloat?

Northern Trust Asset Management Monthly Market Commentary for February 2021

Eurozone Market Update

Euro markets saw a relatively mundane month with the front end remaining anchored, as investor outflows across the industry meant there was little movement from a yield perspective. The mid to long term part of core-Euro Sovereign curves moved up 10-30bps month-over-month.

The ECB signalled a divergence to the BoE and Fed on the recent sell-off in rates with ECB President Lagarde and members Schnabel and Lane providing gentle pushback against the move in long end yields and the negative impact it could have on the economic recovery through higher financing conditions.

The market reacted positively to Mario Draghi, the former ECB President, becoming the Prime Minister of Italy. It is expected he will play a critical role in further strengthening the integration of the EU.

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