Oliver Mangan: Euro pressured by widening interest rate gap
The main factor behind the expectations for higher rates is the marked upgrade to US growth prospects for 2021 and 2022, thanks to the enormous Biden fiscal stimulus package.
The most significant change in financial markets in the first quarter of 2021 has been the marked hardening of interest rate expectations in the US and the consequent sharp rise in long-term bond yields.
The expectation in markets at the end of last year was that US interest rates would be raised very, very slowly, with three-month rates only getting to 1% by the end of 2025.
