The S&P 500 index added 2.6% over the month, but one cannot say that the markets are completely calm and optimistic. On the one hand, economic expectations are certainly improving against the backdrop of large-scale Covid-19 vaccinations deployed in rich countries. For example, many analysts already expect US GDP growth in 2021 by as much as 6-7% thanks to vaccinations, stimulus and low base effect. But with such economic expectations, inflation expectations are also growing, which means that investors want to get more bond yields. The US Treasury bond market slipped significantly in February. The yield on 10-year US bonds rose from 1.07% to over 1.4%, while reaching over 1.6%. This is a very significant move for this market in a month and of course it affects other markets. Against this background, the prices of bonds of developing countries decreased significantly, incl. Ukraine, and in the United States, for example, the cost of mortgages has crept up. Now investors fear that with further growth in bond yields, financial conditions may cease to be stimulating, which will provoke a premature slowdown in the economy. There are more and more calls for central banks to intervene, but their representatives are still only assessing the situation.

The IMF mission in Ukraine, meanwhile, ended without significant progress. It seems that the representatives of the fund still have many questions for the Ukrainian authorities about judicial reform, the fight against corruption, gas prices and other topics that traditionally cause friction. However, there is time to come to an agreement, until autumn Ukraine will be able to finance the budget without external assistance, and towards the end of the year, without new tranches, the country will again face a budget crisis. As for the global situation, so far everything is fine, but later, perhaps, we can expect an increase in volatility. The fall in bonds is not a catastrophe yet, but only a bell. Central bankers have so far argued that inflation will be temporary and that stimulating financial conditions will continue. However, there is another side of the coin. The states and companies entered the coronavirus crisis with a record debt load, which increased during the crisis and continues to grow. Extremely low interest rates allow these debts to be serviced, but there are doubts that the world economy can withstand even a small increase in rates without large-scale shocks and a credit crisis. We think that this year for investors the coronavirus will fade into the background, and inflation and the risk of raising interest rates will come to the fore.