Three-minute Macro – February 2021


There is a wide divergence in the speed of vaccine administration in the G7 countries. The timing of the reopening is dependent on the virus and vaccines but with limited information and no historical precedent, it’s challenging to gauge when the reopening hits the U.S. However, the relative path of current vaccinations is certainly investable as several central banks, including the Bank of Canada and the Federal Reserve, have tied the pace of vaccinations specifically to the path of near-term monetary policy. Slow vaccines imply a later relative recovery and easier monetary policy on a relative basis in the near-term.

Eye on China

Strength from China’s manufacturing economy has rolled over since peaking in November of 2020 and this is growing evidence that China’s cyclical boom is peaking. We have written in the past that China’s credit impulse is rolling over and this has global and cross-asset implications since it tends to lead China’s own business cycle, industrial commodities demand and global PMIs by three to six months.  Covid-19 lockdowns have shuttered the services component of most global economies while the manufacturing component has recovered with strength. We believe that the rollover in China PMIs and the pause in the U.S. ISM manufacturing index is signaling a potential end to the manufacturing over services trade. 

U.S savings, service and stocks

At 13.7%, the U.S. personal savings rate as a percent of disposable income remains elevated relative to pre-Covid levels. Although the savings rate has dropped from its peak of 33.7% in April of 2019, it still remains higher than any other recessionary period on record. These accumulated savings are fueling the pent-up demand in the economy which has propelled equity market valuations. We believe that these savings will drive stark improvements in the service component of the economy in the second half of 2021. 

Copyright Manulife. The opinions expressed are those of Manulife Investment Management as of the date of this publication, and are subject to change based on market and other conditions. The information and/or analysis contained in this material have been compiled or arrived at from sources believed to be reliable but Manulife Investment Management does not make any representation as to their accuracy, correctness, usefulness or completeness and does not accept liability for any loss arising from the use hereof or the information and/or analysis contained herein.  Manulife Investment Management disclaims any responsibility to update such information. Neither Manulife Investment Management or its affiliates, nor any of their directors, officers or employees shall assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained herein.

All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment or legal advice. Clients should seek professional advice for their particular situation. Neither Manulife, Manulife Investment Management Limited, Manulife Investment Management, nor any of their affiliates or representatives is providing tax, investment or legal advice. Past performance does not guarantee future results. This material was prepared solely for informational purposes, does not constitute an offer or an invitation by or on behalf of Manulife Investment Management to any person to buy or sell any security and is no indication of trading intent in any fund or account managed by Manulife Investment Management. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Unless otherwise specified, all data is sourced from Manulife Investment Management.

This information does not replace or supersede KYC (know your client) suitability, needs analysis or any other regulatory requirements.

Manulife, Stylized M Design, and Manulife Investment Management & Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and its affiliates under license.

Erica Camilleri

Erica Camilleri, 

Investment Analyst, Multi-Asset Solutions Team

Manulife Investment Management

Read bio
Frances Donald

Frances Donald, 

Global Chief Economist and Global Head of Macroeconomic Strategy, Multi-Asset Solutions Team, Manulife Investment Management

Manulife Investment Management

Read bio