After soaring to new highs since the start of the year, the US stock market is at a turning point.
Stocks have pulled back in recent weeks amid a rapid rise in the 10-year Treasury yield.
With a vaccine roll-out underway and trillions of dollars in fiscal stimulus, what can investors expect from the US market going forward?
Will the stimulus lead to unwanted inflation?
The US Congress recently passed a US$1.9 trillion stimulus plan to help supercharge the country’s economic recovery. Many fear this could lead to higher inflation; the large fiscal stimulus could trigger a boom in pent-up consumer demand and businesses in turn will respond to the surge in demand by hiking prices.
Rising prices would erode purchasing power and may also force the Federal Reserve to increase interest rates in a bid to rein in inflation. This could send the cost of borrowing higher, driving up expenses for consumers and