• The United States (US) fiscal stimulus package boosts the sentiment for a faster global recovery in 2021
  
• Moderate rise in inflation in the US and Europe augured well for heightened inflation expectations
  
• The energy index further grew in double digits in February, driven by higher crude oil prices
  

The prospects for a global economic recovery in 2021 have strengthened, given the huge doses of additional fiscal stimulus in advanced economies (such as the US), commitment for supportive monetary policy (Europe) and the gathering pace of vaccinations. Labor markets too are showing signs of optimism, with employment gains in the US and stabilizing unemployment rate in Europe. Amid these positive cues, financial markets faced volatility in February, as US bond yields rose on the back of higher inflation expectations. Bond yields increased in Europe, too, creating fears about higher borrowing costs threatening the nascent global recovery.

Net-net though, real economic activity is expected to strengthen, particularly in the second half of the year. Additionally, central banks are once again gearing up to allay market fears with more ammunition out of their toolkit.