If this week the center of attention has been taken by Christine Lagarde and the European Central Bank after a meeting of rates that was expected to be important in the face of a change in the message issued by the institution, in the coming days the ball will fly over the Atlantic to stay on the roof of the Federal Reserve, whose FOMC (Open Market Committee) will meet to discuss the terms of US monetary policy before the summer holidays and, especially, the Jackson Hole conclave in August, when it could serve as a turning point for the main central bankers to finally change course towards a de-escalation of accommodative policies.
Although, although inflation and the overheating of the economy had been placed as the main concern of investors in the previous weeks, the increase in cases of coronavirus by the Delta variant has cooled this fear, as explained by Chris Iggo, director AXA IM Investment Report: “The concern about the overheating of the economy seems to have been exaggerated, as the Delta variant reminds us that the battle against the pandemic is far from over.”
“Investors should prepare for the possibility that the yield on US 10-year bonds will hit 1% again shortly,” he adds. In this sense, in recent days we have seen how the T-Note has exceeded 1.30% and reached 1.20% in just two sessions, soFixed income volatility remains high, awaiting a clear message from Jerome Powell, who last week worked hard to remind markets that there is still a lot of recovery to support in the monetary way.
“The macro narrative remains that of a post-pandemic recovery. However, recently markets have reflected their concern about the increase in the number of Covid cases as the Delta variant becomes dominant and what this could mean. for the rate of reopening, the effect on the supply of goods and labor and the renewed pressures on the provision of health care “, they explain from AXA.
From Pimco, they believe that “the most likely result of the meeting is that our tapering announcement schedule in December will be confirmed since the firm inflation data will have little consequence at this meeting.”
“However, we cannot rule out a scenario where they provide advance notice at this meeting, pointing to September for such an announcement as there are seven committee members forecasting rate hikes for 2022 and would probably prefer tapering sooner. and faster than expected by the consensus, although we do not believe that Powell is one of them, “they conclude.
Other data of interest
Beyond the Fed rate meeting next Wednesday, during the week there will be many other data on the macro agenda that will be relevant for the markets. The first of these will be the economic forecasts that the IMF will reveal on Tuesday in a report in which it is expected to keep its forecast for global economic growth for 2021 at 6%.
Likewise, there will also be important data in the Old Continent, although we will have to wait until Friday to know them, which will be when both the unemployment rate and the preliminary inflation rate for July are published . Similarly, the evolution of GDP for the second quarter of the year in the euro area will be known. And earlier, this Monday, the IFO business situation survey will be released in Germany .
“We must also be attentive to the current data on the United States real estate market, whose evolution should play an increasingly important role in the decisions of the central bank of that country,” they point out from Allianz GI, who also add that “the The Conference Board Consumer Confidence Index on Tuesday could give new signs of inflationary pressure, while the preliminary estimate of US economic growth for the second quarter should reflect the economy reaching a peak. ”
Finally, the earnings season continues its course, picks up speed on Wall Street and begins on the Old Continent with companies such as Ryanair, LVMH, Endesa, Santander, Telefónica, AB InBev, Nestlé or Volkswagen , among many others.
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