Canada’s TSX shed 163 points or 0.9% to 18,060 on Friday after dropping the most in nearly a month, as oil prices continued to decline and bond yields went up. On the domestic side, data showed domestic producer prices rose by 2% on a monthly basis. On the corporate side, shares of Pembina Pipeline Corp fell 3% after the company said it could no longer predict a start date for the proposed Jordan Cove liquefied natural gas export plant in Oregon. During the week, the TSX declined 1.7%.

Wall Street closed little changed on Friday and booked a negative week, as stimulus hopes intensified. Investors remained expectant with Big Tech recouping some of the previous session’s sharp losses, as the House is expected to pass later today a $1.9 trillion Covid-19 stimulus package and send Biden’s relief plan to the Senate. On the macro side, the 10-year Treasury yield dropped about 6 basis points to 1.46% on Friday after surging 1.6% on Thursday. The personal consumption expenditures price index indicated that inflation rose 0.3% in January, slightly ahead of the 0.2% expected by analysts but up only 1.5% on an annual basis. The Dow Jones dropped 470 points or 1.5% to 30,932. The S&P 500 declined 18 points or 0.5% to 3,811. In contrast, the Nasdaq added 73 points or 0.6% to 13,192.

Personal spending in the US jumped 2.4 percent month-over-month in January of 2021, following an upwardly revised 0.4 percent drop in December and compared to market forecasts of a 2.5 percent rise. It is the biggest rise in consumer spending since June amid an increase in payments and unemployment insurance benefits. Spending was boosted by recreational goods and vehicles (notably, information processing equipment) as well as food and beverages, food services and accommodation and health care (led by outpatient services). In contrast, declines were seen in spending on housing and utilities (led by electricity and gas).

Oil is heading for a 19% monthly gain in February, the fourth consecutive month of gains and the most since November. Both WTI and Brent recovered to pre-pandemic levels earlier this month, bolstered by tightening global supplies and prospects of an economic recovery driven by a COVID-19 vaccination campaign globally and fiscal stimulus. Further supporting prices was a fall of almost 6 million barrels of combined production in the US because of the cold blast last week that forced the shutdown of wells and processing plants. Meantime, traders started to worry about a looming increase in crude oil supplies from OPEC+ as the cartel meets on March 4th while refineries in Texas began to resume operations. In the New York afternoon trading, WTI was trading around $62 a barrel and Brent about $66 a barrel.

European stock markets ended deep in the red on Friday, with Frankfurt's DAX 30 falling 0.7% to 13,786 and other major indexes dropping between 0.9% and 2.5%, as investors fear that the surge in Treasury yields and rising inflation rates could prompt central banks to tight monetary policy sooner than expected. The losses came even as European Central Bank policymakers Philip Lane and Isabel Schnabel signaled earlier in the session that the ECB could provide more support, if rising yields hurt the Eurozone recovery. On the corporate front, earnings from Deutsche Telekom increased on higher revenue, while German chemicals giant BASF said it expects 2021 earnings to recover in 2021. For the month, the DAX 30 gained 2.6%.

Gold extended losses to an 8-month low below $1,730/oz and was heading for a 6% monthly drop in February, the most since an 8.2% drop in November 2016, as soaring long-term yields spooked investors away from the metal as it became less attractive because it does not offer interest. Expectations of a robust economic recovery fueled by the vaccines’ rollout and more government spending triggered inflation fears, which, in turn, drove US Treasury yields to levels not seen in over a year.

Mexico’s IPC gained 0.6% to 44,593 on Friday to recoup some of the losses from the previous session’s sell-off, triggered by rising bond yields in the US. On Thursday, GDP growth for the fourth quarter was revised upwardly to 3.3% QoQ from 3.1% in the preliminary reading, as economic activity in December expanded 0.1% on a monthly basis compared to expectations of a 0.6% decline. On Wednesday, Moody’s revised its 2021 GDP growth forecast for Mexico to 5.5%, slightly higher than the federal government’s 5% target revised earlier in the week. During the week, the IPC declined 0.7%.

Brazil's Ibovespa lost 2% to 110,035 on Friday to extend the sell-off, booking a 7% weekly fall, as investors continued to monitor yield swings and domestic policy negotiations. On Friday, President Jair Bolsonaro said that the government should settle the value of the emergency aid at R$250, to be paid from March for a maximum period of four months, adding that he hoped that, starting in July, there would be a new proposal to reform the "Bolsa Família". On the economic side, the jobless rate dropped 0.7pps from the previous quarter to 13.9% in the three months to December. Meantime, Brazil's nominal budget surplus narrowed to BRL 17.9 billion in January of 2021 from BRL 19.1 billion a year ago; while gross government debt reached 89.7% of GDP in January, the highest level on record.

The US goods trade deficit widened to USD 83.74 billion in January 2021, from USD 83.19 billion in the previous month, the advance estimate showed. Imports rose 1.1 percent to USD 218.9 billion, led by purchases of consumer goods (5.4 percent), industrial supplies (1.8 percent), capital goods (0.7 percent), and foods, feeds, & beverages (6.4 percent). Imports of vehicles slumped 4.7 percent. Meanwhile, exports increased 1.4 percent to USD 135.2 billion, boosted by higher sales of industrial supplies (5.5 percent) and capital goods (3.9 percent). Exports were down for vehicles (-5 percent), consumer goods (-3.4 percent), and foods, feeds, & beverages (-4.5 percent).