Inflation is the main keyword on the economic calendar today.
First off, Australia published its inflation rate for the second quarter of 2021, which came in at 3.8%, as expected. QoQ inflation was slightly better than the forecast at 0.8%.
Canada will be the second country to deliver inflation data a bit later today. June inflation is supposed to have reached 3.2%, a bit down from the previous month.
Other notable data today includes the GfK consumer confidence index for August in Germany, which came in at -0.3, below the forecast of 1.
Meanwhile, Italy published better than expected consumer and business confidence for July, while France disappointed with its own consumer confidence report.
But arguably the most important fundamental event of the day will be the end of the Federal Reserve’s monetary policy meeting and Chairman Jerome Powell’s subsequent press conference.
At this point investors do not expect that the Fed will adjust interest rates, nor will they abruptly announce that they are cutting down asset purchases. Nevertheless, many hope that Powell will signal the central bank’s readiness to start tapering stimulus soon, especially since the Fed Head previously stated that the markets will be given an early warning before tapering begins.
Inflation has been increasing very quickly in the United States, which led many to believe that the Federal Reserve will reduce its bond purchases sooner rather than later. However, that sentiment did not account for the spread of the delta Covid-19 variant in the United States and the possibility of new lockdowns that it entails.
In terms of the stock market, we are seeing the situation in China stabilize a little bit. The government is trying to calm investors again, to limited success, but at least there aren’t such dramatic drops today as there were a few days ago.
US stock indices will also trade muted today, partially because of the trends in China, and also due to the Fed’s meeting. Plus, the corporate earnings season is also not over. Tech giants Apple, Alphabet, and Microsoft all did very well yesterday, and today it’s Facebook’s turn to report. Other big companies publishing earnings reports today include Starbucks, McDonald’s, Paypal, and Ford Motor.
Covid-19 also remains a hot topic today. The United States will reportedly force all federal workers to get vaccinated, and will impose some partial mask mandates indoors for everyone in order to limit the spread of the delta variant of the coronavirus. The US had over 100,000 new cases yesterday, the highest daily increase since the peak of the pandemic this winter.
