Global stock prices inched higher while U.S. bond yields hovered near a 13-month peak on Monday as investors bet U.S. economic growth will accelerate after the $1.9 trillion stimulus bill President Joe Biden signed into law last week.

The rollout of COVID-19 vaccinations in the United States and some other countries stoked a bullish mood on risk assets even as investors become wary of key central bank policy meetings later in the week, including the U.S. Federal Reserve’s.

“The U.S. is now vaccinating more three million people a day, with President Biden now saying all adults will be able to get a shot by May 1. It could soon achieve a herd immunity and an economic normalisation,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

European shares are expected to open higher, with Euro Stoxx 50 futures up 0.3% and FTSE futures trading 0.5% higher.

U.S. S&P500 futures rose as much as 0.37% in Asia before erasing gains, trading just below a record high level touched last week, while Japan’s Nikkei ticked up 0.2%.

Mainland Chinese shares, however, dropped despite data showing a quickening in industrial output and a rise in retail sales, with bluechip CSI 300 index falling 2.6% on policy tightening worries.

Surveillance equipment maker Hikvision lost 3.2% after the U.S. Federal Communications Commission (FCC) designated the firm, along with four others Chinese companies including Huawei Technologies, as posing a threat to national security.

The fall in Chinese shares helped to drive MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.7%.

FILLING THE HOLE

The U.S. House of Representatives gave final approval last week to the COVID-19 relief bill, giving Biden his first major victory in office.

“Most market participants and policy-makers have been surprised by the speed of the recovery. On our estimates, the U.S. economy will reach pre-COVID-19 output levels by the current quarter,” said Chetan Ahya, global head of economics at Morgan Stanley in New York, in a note.

“Fiscal policy is doing much more than fill the output hole. Transfers to households have already exceeded the income lost in the recession. As reopening gathers pace, the labour market is poised for a sharp rebound.”

Investors also suspect the $1.9 trillion package, which amounts to more than 8% of the country’s GDP, could stoke inflation – to the detriment of bonds, especially when their yields are so low.

Rising inflation expectations could prompt the Federal Reserve to signal it will start raising rates sooner when it announces its latest economic projections at the end of Federal Open Market Committee (FOMC) meeting on Wednesday.

“Following the fiscal stimulus packages it is inevitable that Fed GDP forecasts will be revised up, and some FOMC members might think rates will have to move higher sooner than they anticipated last December,” wrote economists at ANZ.

The 10-year U.S. Treasuries yield stood at 1.634%, having risen to as high as 1.642% on Friday, a high last seen in February last year.

Higher U.S. bond yields saw the dollar rising against other major currencies.

The euro slipped 0.2% to $1.1929 from last week’s high of $1.1990 while the dollar hit a nine-month high of 109.27 yen.

The British pound slipped 0.5% to $1.3902.

Bitcoin briefly slipped to $58,742, off a record high of $61,781 hit on Saturday, after Reuters reported a senior Indian government official said Delhi will propose a law banning cryptocurrencies, fining anyone in the country trading or even holding such digital assets.

Oil prices were supported by production cuts by major oil producers and optimism about a demand recovery as the global economy recovers from the pandemic-induced recession.

U.S. crude futures traded at $65.99 per barrel, up 0.6% on the day.