The Great Pandemic Reflation (2020-21), a stimulus-induced recovery that brought the US economy back to life from the depths of a sharp downturn, will likely go down in history as one of the most dramatic macroeconomic events on record, QNB said in its latest report.
After the US nominal GDP collapsed by more than 33% annualised in Q2 2020, it rebounded strongly, printing annualised nominal growth rates of 38%, 6%, and 11% in the three following quarters to Q1 this year.
In the process, US markets enjoyed extraordinary rallies, with equity indices staging strong performances and cyclical commodities paring previous losses or even making new highs, QNB said.
Importantly, macro-sensitive bond markets confirmed the positive backdrop. In fact, from August 2020 to March 2021, bond yields pointed to continuous tailwinds for the US economy. The benchmark spread between 10-year and two-year Treasuries widened, producing a healthy…