UK equities recorded losses last week, with cyclical sectors being hardest hit: energy, travel and retail. Defensive sectors fared better. The BoE took a hawkish turn: Michael Saunders, a member of the Bank of England's Monetary Policy Committee, said last week that “It may become appropriate fairly soon to withdraw some of the current monetary stimulus in order to return inflation to the 2 per cent target on a sustained basis”, adding that options could include “curtailing the current asset purchase programme — ending it in the next month or two and before the full £150bn has been purchased — and/or further monetary policy action next year.” For the week, the FTSE 100 closed down 1.6%, Small Caps -1.3% and the Stoxx 600 -0.6%.

There were 51,870 new coronavirus infections in 24 hours on Friday, up from 48,553 on Thursday. Despite this surge, Prime Minister Boris Johnson has maintained the decision to end all restrictions today, betting that vaccination rates are sufficient. More than 1,200 scientists around the world have condemned the move in a letter, fearing that this will lead to a surge in infections that could enable vaccine-resistant variants to develop.

 

Things to read:

The two big reasons to doubt the global boom (Financial Times)

Zoom to Buy Five9 for $14.7 Billion to Boost Post-Covid Growth (Bloomberg)

Fed’s tilt towards tighter policy unleashes dollar bulls (Financial Times)

Don’t Believe the Inflated Yields on Inflation-Protected Bond Funds (WSJ)