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Monthly Pulse - July 2021

Economic Outlook

Clarus Capital Group AG,  Wednesday, 1st July 2021

Today, over 15 months after COVID-19 outbreak was declared a pandemic the virus still poses a threat to the markets. Another new variant forces cities into lockdowns and travellers into quarantines. However, some countries, such as Singapore, are already overcoming the COVID-19 situation and declaring an end to contact tracing and other measures taken as soon as there are enough people vaccinated. Therefore, the focus is on the real economy: a rapid recovery that has been observed in some countries makes investors nervous, as it might bring high inflation and early tapering. The ambitious spending plans proposed by the US president require financing, which introduces an additional risk factor: an increase in corporate taxes that would hurt companies’ profit margins and thus result in lower yields to investors.

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