Financial markets and the economy in 2021
At the outset of 2021, financial markets had shaken off the shock from the outbreak of the pandemic in the winter/spring of 2020. Governments in numerous countries had launched comprehensive countermeasures, with swift interest rate cuts, bond purchases, expansionary fiscal policies and direct support to vulnerable companies and consumers. This had helped calm nerves and build confidence, which in turn had lifted financial markets to new all-time highs.
Not until 2021, however, did these countermeasures begin to take full effect. Meanwhile, a lot of demand had been put on hold due to uncertainty and direct restrictions on the supply side, not least travel, restaurant visits and other services with physical customer contact. With the easing of restrictions, households had significant amounts of cash ready to be spent.
We thus entered 2021 with strong potential demand in the world economy.
And we were yet to worry about Russia and Ukraine.
2021 in a nutshell
|S&P 500 return||28.7%|
|MSCI World net (USD)||21.8%|
|3-month NIBOR||from 0.49 to 0.95%|
|10 year Norwegian Treasury||from 0.96 to 1.70%|
|10 year Swedish Treasury||from 0.03 to 0.23%|
|10 year US Treasury||from 0.92 to 1.51%|
|Brent Blend||from USD 51.80 to USD 77.78|
|USD/NOK||from 8.53 to 8.82|
|EUR/NOK||from 10.47 to 9.99|
|USD/SEK||from 8.19 to 9.04|
|GDP growth, global||5.9%|
|GDP growth, Norway||3.9%|
|GDP growth, Sweden||5.2%|
|GDP growth, Mainland Norway||4.2%|
Sources: Oslo Børs, S&P Dow Jones Indices, MSCI, Norges Bank, FactSet, IMF, SSB, SCB, Riksbanken, Pareto.