The Democratic stimulus plan is more or less on par with expectations. It will target households and small businesses to help them get through the crisis created by the global pandemic. In particular, a new basic check of USD 1400 per person, modulated according to income, will be distributed. Congress has yet to vote on the plan.

Meanwhile, Fed boss Jerome Powell also said exactly what was expected, namely that rates will not go up in the near future and that there is no question of stopping the buyback program.

So the Federal Reserve continues to irrigate the U.S. economy, while the state increases its debt to plug societal gaps until the economy recovers. A strategy identical to that adopted in Europe, whose success depends essentially on the speed of the eradication of the coronavirus, or at least its return within limits that are socially acceptable for the population and structurally manageable for the authorities.

In recent days, the debate on "reflation" is beginning to take shape. The idea being that the increased spending by the Democratic administration combined with a return to normalcy following a successful vaccination campaign, would vigorously revive the American economy, leading to a substantial price increase. Yesterday, the Fed President cut short the rumors by clearly stating that the U.S. central bank would continue its very accommodating policy, that it would not revise downwards its securities repurchase program and that in the short term, no rate hikes are to be expected. He added that the Fed learnt from the financial crisis of 2008 that one should be careful not to exit too early and also try not to discuss this issue permanently  because the markets are listening.

Some data to close the week. In Europe, we have the British monthly GDP and the EU trade balance. In the US, the focus will be on retail sales, the Empire Manufacturing Index and inflation, industrial production and the University of Michigan's Consumer Confidence Index.