🏦 Why Central Banks Will Remain Dovish: UBS

• Taiwan has been a face point as the resurgence of covid and subsequent stock market drop has led to fears this could be repeated elsewhere. According to Simon Penn and Nick Verdi, this should be taken seriously.

• Singapore, for instance, is going back to remote schooling and in Me UK, Prime Minister Boris Johnson on Friday sounded very concerned about the India variant, which has been backed up by comments from health experts over the weekend.

• General supply shortages (not least in semiconductors) get much worse if APAC goes back into some form of lockdown. TSMC has pledged to clear the backlog, but new lockdowns make that impossible.

• In the UK, it is looking more doubtful that the lockdown will be fully lifted on June 21, as planned. From a markets' perspective, these are all more reasons for central banks to be dovish, and it gives ECB President Christine Lagarde an argument against the Governing Council hawks at the next meeting on June 10.

• The momentum in equity is all with the value stocks, but that may be a cause for concern. Having watched real yields fall further, the sell-off in mega cap tech looks a bit overdone.