There was an air of anxiousness to the markets this Thursday, and not without good reason.
It’s a busy session, with the month’s ECB meeting and the latest US inflation readings vying for investors’ attentions.
For Christine Lagarde and the gang, increased optimism of an economic recovery in the Eurozone –to be backed up by a new set of forecasts this afternoon – and a region-wide inflation reading that is now beyond the 2% target are the main points of focus. And that could cause the ECB to start talking about tapering its €1.85 trillion bond-buying programme.
It’s likely that it will be subtle stuff. No policy change announcement, but the removal of certain key phrases in relation to the bank’s bond-buying intentions going forwards. After all, with the Delta variant a threat, the Eurozone is far from out of the covid-woods yet, and the ECB will want to signal to investors that it is still committed to doing what is necessary to support the region.
As for the States, this afternoon’s CPI readings could be slightly more market-friendly. Both the standard and core figures are forecast to shrink month-on-month; the former from 0.8% to 0.4%, the latter from 0.9% to 0.5%. It is worth noting, however, that the same was expected last month, and instead we got a pair of recent highs.
Joining the inflation numbers is the latest weekly jobless claims reading, which is set to drop to a fresh pandemic-low of 370,000.
In anticipation of all this the markets were something of a mixed bag. Sterling’s continued losses against the dollar and euro meant that the FTSE could eke out a 7,100-crossing, 0.3% index, while the DAX and CAC fell 0.4% and 0.2% respectively. The Dow Jones is set to be somewhere in between, currently heading for a 0.1% increase, though that is almost certain to change once the inflation data is out.
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