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Will US Inflation Start To Climb?

By Spreadex (Connor Campbell)Market OverviewMar 07, 2021 08:32
uk.investing.com/analysis/will-us-inflation-start-to-climb-200461515
Will US Inflation Start To Climb?
By Spreadex (Connor Campbell)   |  Mar 07, 2021 08:32
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The pressure is on Wednesday’s inflation reading thanks to the market’s fears over interest rates and rising bond yields.

US

With United States 10-Year Treasury yields rising last week – especially after Jerome Powell provided no word on what the Federal Reserve would do if it felt it needed to combat the drop in bond prices – the US markets have been gripped by fears over an economic re-opening-led jump in inflation.

It is, of course, far too early to tell whether inflation is going to surge. Joe Biden’s $1.9 trillion American Rescue Plan – one of the key causes of these inflation concerns – won’t be implemented until mid-March at the very earliest.

However, given the recent brouhaha around the topic, there are going to be a lot of eyes on Wednesday’s inflation reading.

Between December and January, inflation actually fell. The standard reading slipped from 0.4% to 0.3%, while the core number failed to rise as forecast, instead dropping from 0.1% to 0.0%. When you look at those figures, you can see why some people have questioned the recent inflation-fearing panic.

Beyond bond yields, inflation, and the related progress of Biden’s stimulus package, there’s not a whole lot on for the US markets.

Thursday’s jobless claims and JOLTS job openings numbers are going to continue to be of interest, given that some investors are now fearful of any signs of a strengthening jobs market.

Friday, finally, has the core and standard PPI readings alongside the preliminary consumer sentiment and inflation expectations figures from the University of Michigan.

UK

As in most quiet weeks, the FTSE is likely going to take is cues from the US, specifically around the issue of rising bond yields and the damage that does to equity prices.

There are some key, UK-specific moments for investors to watch out for, however. Bank of England governor Andrew Bailey speaks on Tuesday and the markets will want answers on everything from monetary policy, to forecasts, to what his own thoughts are on inflation.

The UK then saves all its data up for Friday, when it releases the monthly GDP, construction output, industrial production and manufacturing production figures.

In terms of corporate updates, Direct Line Insurance Group PLC (LON:DLGD) and Clarkson (LON:CKN) are up on Monday, with DFS Furniture PLC (LON:DFSD) on Tuesday, Balfour Beatty (LON:BALF), Foxtons (LON:FOXT) and Just Eat (LON:JE) on Wednesday, and WM Morrison Supermarkets PLC (LON:MRW) and Rolls-Royce (LON:RR) on Thursday.

Eurozone

Like every other central bank at the moment, investors will expect the ECB to comment on inflation, interest rates and bond yields during Thursday’s post-meeting press conference. This especially in light of Bundesbank chief Jens Weidmann stating that the ECB has ‘ways to react to this’.

Before that point, there is German industrial production on Monday, revised region-wide GDP on Tuesday, and French industrial production on Wednesday. Friday then ends the week with the industrial production data for the Eurozone as a whole, alongside Germany’s own inflation reading.

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Will US Inflation Start To Climb?
 

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Will US Inflation Start To Climb?

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