Itaú BBA - Macro Scenario – Global: Recovery leads to higher yields 

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Macro Scenario – Global: Recovery leads to higher yields 

March 12, 2021

The economic normalization will likely continue to put pressure on US (and global) yields

For the version with all charts and tables, please open the attached pdf file

• U.S. economic normalization with ample stimulus will generate fast job recovery (payroll above 1.0 million/month in 2Q), lead core inflation above 2.0%, cause the Fed to taper in 2022 and push the FFR higher starting in 1Q23, which is likely to end the cycle at 2.75% by 2025.

• Vaccination rate in Europe to catch up in 2Q21. We expect GDP at 4.5% in 2021 and at 4.2% in 2022.

• China has a soft landing, with gradual withdrawal of stimulus. We forecast GDP at 8.5% this year (from 2.3% in 2020) and at 5% in 2022.

• Higher US rates to sustain the USD, but vaccination catch-up in Europe (and EMs) to mitigate strong USD for now. We revised our EUR/USD estimate to 1.20 (from 1.23) for 2021 and continue to expect 1.15 for 2022.

• Commodities: no super-cycle.

• Central Banks more constrained in LatAm.



For the version with all charts and tables, please open the attached pdf file



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