The most important economic report to be published today is the minutes from the June monetary policy meeting of the European Central Bank. There was no change in the attitude of the ECB towards policy at the time, but investors are curious to learn more about any potential tapering in the central bank’s asset purchases which might have been mentioned during the meeting.
The ECB is also expected to speak about its plans for handling inflation. In the past, the markets did not receive specifics about the central bank’s goals, but now it is expected that the ECB will become more tolerant of higher inflation, similar to the Federal Reserve. But unlike the situation in the United States, inflation is not rising in the EU that quickly, despite all of the stimulus the ECB is pumping into the economy.
As is typical of any Thursday, there was jobless claims data published in the United States today. The initial jobless claims this past week were higher than the forecast, as were continuing claims. The difference between the actual result and the forecast is not great but it does point to the fact that the labor market is not recovering at the pace experts expect it to recover.
Besides the jobless data, US markets today will also remain under the influence of yesterday’s Fed minutes. The report revealed that the Federal Reserve is considering tapering its asset purchases this year, reducing the amount of stimulus flowing into the US economy to prevent it from overheating.
Thanks to this hawkish hint, US stock indices are likely to drop lower today. US Treasury bond yields are also declining. The US dollar, on the other hand, is strengthening, as are other safe havens like the Japanese yen.
In other news, today sentiment turned even more pessimistic due to the announcement that Japan is entering another state of emergency over the coronavirus pandemic. Covid-19 cases have continued to climb in the prefecture of Tokyo because Japan still has not vaccinated any significant portion of its population.
Due to the virus spreading rapidly in Japan, the 2020 Summer Olympics, which were postponed to this summer, will take place without an audience, and will not generate the revenue such events usually do.
