It is a new week in the financial markets, and one that is bound to be somewhat less exciting than the previous two weeks, with inflation and payrolls data from the US, an ECB policy meeting, and a G7 summit already behind us.
Of course, this week investors have the Federal Reserve’s policy meeting to look forward to on Wednesday. Inflation in the United States is rapidly climbing, but the labor market is not recovering at the desired pace, and the Fed has warned that spikes in inflation are temporary, and a result of its ultra loose monetary policy.
Thus, while some investors hope for signs of hawkishness, they are most probably not going to get them this week. Still, in the days leading up to the meeting we expect the subdued mood in the financial markets to continue in the absence of any other major news and reports.
All major US stock indices today will remain largely flat, if slightly higher in anticipation.
In fact, today there is only one somewhat important publication - the April industrial production rate from the eurozone, which outperformed the forecasts, coming in at 39.3%, but even that can be considered only mildly interesting.
The coronavirus is also fading from the headlines, now that the most keenly followed outbreaks are dying down, most developed countries are well onto their path towards herd immunity, and poorer countries were promised donations of millions of vaccine doses before the summer’s end.
As of today, there have been 176.7 million Covid-19 cases worldwide. The daily global infection rate dropped to 300,000 yesterday, its lowest since February, a time before the latest record-breaking outbreak in India.
The latter, with 29.5 million cases, has almost caught up to the United States (34.2 million cases), well ahead of Brazil (17 million) and all other heavily-affected countries. Still, infections in India have retreated from their maximums of over 400K cases per day and have gone down to 80-70 thousand new infections per day.
Covid-19 could become a hot topic again today if UK Prime Minister Boris Johnson announces that the country will not be ending the last of its restrictions on June 21, like planned earlier. The UK is now seeing the spread of the Delta variant (which originated in India) in its territory, and 90% of the new cases are precisely from this kind of coronavirus. As with other new variants, it is possible that the vaccines developed in 2020 might offer a slightly lower protection to the new mutation of the virus and lockdown measures might still be necessary for some time to contain the disease.
Meanwhile, Bitcoin is up to almost $40,000 again, thanks to the biggest cryptocurrency influencer Tesla CEO Elon Musk speaking in favor of it again. Musk is working with cryptocurrency miners to help find sustainable ways for them to produce Bitcoin, and has stated that Tesla will accept Bitcoin as a payment method again if there is a way to establish clean energy mining practices.
