Wochenausblick: Ist die heiße britische Inflation permanent?

Was Big Data angeht gibt es diese Woche einiges zu sehen. Zunächst haben wir die VPI-Zahlen für Großbritannien. Bleibt die Inflation länger bestehen als gedacht? Flash-PMIs für Großbritannien und die EU kommen ebenfalls jetzt zu einer Zeit, in der es so aussieht, als ob die Wirtschaftstätigkeit sich verlangsamen würde. Außerdem ist es US-Earnings-Season mit Berichten der führenden Tech-Unternehmen.

VPI für Großbritannien: Falken und heiße Daten

Auf der Daten-Seite ist eine der großen Veröffentlichungen dieser Woche der Verbraucherpreisindex für Großbritannien.

Die Zahlen vom September zeigten, dass die Inflation in Großbritannien das Ziel der Bank of England von 2% für August übertroffen hat. Verbraucherpreise steigen in den letzten 12 Monaten um 3,2%, dem höchsten monatlichen Anstieg seit Beginn der Aufzeichnungen im Jahr 2017.

Das Office for National Statistics (ONS) sagte, dass der Anstieg „vermutlich vorübergehend ist“ und vermutlich das Regierungsprogramm „Eat out to Help out“ zu dem Anstieg beigetragen hat.

„Im August 2020 wurden viele Preise in Restaurants und Cafés aufgrund des „Eat Out to Help Out“-Programms der Regierung, bei dem Kunden zwischen Montag und Mittwoch Speisen und Getränke zum halben Preis zum Verzehr im Lokal (bis zu einem Wert von 10 £) angeboten wurden“, sagte das ONS in seiner Erklärung.

„Weil EOHO eine kurzfristige Maßnahme war, ist der Anstieg der 12-monatigen Inflationsrate im August 2021 vermutlich vorübergehend.“

Die offizielle Position war, dass höhere Preise nur vorübergehend bestehen bleiben würden, aber Stimmen aus der Bank of England warnen, dass sie länger bleiben könnten, als zunächst gedacht.

Der neue Chef-Ökonom der BoE Huw Pill sagte, dass er glaube, die heiße Inflation würde bleiben.

„Meiner Ansicht nach verschiebt sich dieses Risikogleichgewicht derzeit in Richtung großer Sorgen um die Inflationsaussichten, da sich die aktuelle Inflationsstärke als nachhaltiger erweisen könnte als ursprünglich erwartet“, sagte Pill im September.

Pill stimmt damit bei den immer lauter werdenden Falken in Rat der Bank of England mit ein. Eine Anzahl der MPC-Mitglieder rufen nach einer Zinserhöhung im früh im nächsten Jahr. Ein weiterer hoher VPI-Wert im September könnte daher dazu führen, dass die Stimme der Falken noch lauter wird.

Läuten die PMIs die wirtschaftliche Verlangsamung ein?

Es ist außerdem Zeit für Flash-PMIs.

Diese Woche werden Daten für Großbritannien und die EU veröffentlicht, nachdem der Bericht des letzten Monat darauf hindeutete, dass sich das Wachstum der beiden großen Volkswirtschaften verlangsamt.

Lassen Sie uns mit Großbritannien beginnen. Der IHS Markit Flash Composite für September zeigte, dass die Leistung auf den niedrigsten Stand seit Februar gefallen war. Großbritannien verzeichnet 54,1 Punkte, ein Abstieg von 54,8 im August.

Die Erholung scheint mit dem Beginn der Wintermonate stehenzubleiben. Geringere Wirtschaftstätigkeit zusammen mit höherer Inflation führen nicht gerade zum besten Ergebnis für die Zukunft der britischen Wirtschaft.

Der PMI für den Dienstleistungssektor fiel von 55,0 im August auf 54,6 im September, den niedrigsten Stand seit Februar, als Großbritannien noch im Lockdown war. Für das produzierende Gewerbe viel er von 60,3 auf 56,4, was wieder der niedrigste Stand seit Februar ist.

Auf der anderen Seite des Ärmelkanals ist es das gleiche. Das europäische Wachstum wurde durch Lieferengpässe gehemmt, was die Input-Kosten in der gesamten EU im letzten Monat auf ein 20-Jahres-Hoch trieb. Werden die PMI-Zahlen diesen Monat das Gleiche zeigen?

Was die Punkte angeht, zeigten die IHS-Verbundszahlen, dass das wirtschaftliche Wachstum im September auf ein Fünf-Monats-Tief gefallen ist. Die EU erreichte in dem Monat 56,1Punkte gegen 59,0 im August.

Das liegt weit unter den Marktprognosen. Eine Reuters-Umfrage deutete darauf hin, dass Ökonomen und Analysten glaubten, dass sich der Output verlangsamen würde, aber mit langsameren 58,5.

Die größten Faktoren scheinen hier Lieferengpässe zusammen mit einer allgemeinen Verlangsamung des BIP-Wachstum zu sein. Die EU-Wirtschaft nährt sich ihrer Vorpandemie-Größe, eine Verlangsamung war also immer in den Karten, aber nicht so drastisch.

Ich würde erwarten, dass die neuesten Zahlen am Freitag niedrigere PMI-Zahlen für die EU zeigen werden.

Immer neue Geschäftsberichte von der Wall Street – jetzt kommen die Tech-Aktien

Nächste Woche stecken wir mitten in der Q3-Earnings-Season. Die Großbanken waren letzte Woche dran, unter anderem Goldman Sachs, Citigroup und JPMorgan. Jetzt sind einige der Tech-Riesen dran, ihre jüngsten Geschäftsberichte zu teilen.

Netflix und Tesla sind die zwei, auf die man diese Woche besonders achten sollte. Beide legten starke Zahlen für Q1 und Q2 vor, haben aber angemerkt, dass die Leistung im dritten Quartal 2021 schlechter sein könnte.

Für weitere Informationen dazu, welche Unternehmen ihre Geschäftsberichte veröffentlichen, schauen Sie in unseren US-Earnings-Season-Kalender.

Top Wirtschafts-Daten

Date  Time (GMT+1)  Asset  Event 
Mon 18-Oct  3:00am  CNY  GDP q/y 
  3:00am  CNY  Retail Sales y/y 
  2:15pm  USD  Industrial Production m/m 
  3:30pm  CAD  BOC Business Outlook Survey 
Tue 19-Oct   1:30am  AUD  Monetary Policy Meeting Minutes 
       
Wed 20-Oct  7:00am  GBP  CPI y/y 
  1:30pm  CAD  CPI m/m 
  1:30pm  CAD  Common CPI y/y 
  1:30pm  CAD  Median CPI y/y 
  1:30pm  CAD  Trimmed CPI y/y 
  3:30pm  USD  Crude Oil Inventories 
       
Thu 21-Oct  1:30pm  USD  Philly Fed Manufacturing Index 
    USD  Unemployment Claims 
       
Fri 22-Oct  7:00am  GBP  Retail Sales m/m 
  8:15am  EUR  French Flash Manufacturing PMI 
  8:15am  EUR  French Flash Services PMI 
  8:30am  EUR  German Flash Manufacturing PMI 
  8:30am  EUR  German Flash Services PMI 
  9:00am  EUR  Flash Manufacturing PMI 
  9:00am  EUR  Flash Services PMI 
  9:30am  GBP  Flash Manufacturing PMI 
  9:30am  GBP  Flash Services PMI 
  1:30pm  CAD  Core Retail Sales m/m 
  1:30pm  CAD  Retail Sales m/m 
  2:45pm  USD  Flash Manufacturing PMI 
  2:45pm  USD  Flash Services PMI 
  Tentative  USD  Treasury Currency Report 

Top Geschäftsberichte

Tue 19 Oct  Wed 20 Oct  Thu 21 Oct  Fri 22 Oct 
Philip Morris International (PM)   Verizon Communications Inc (VZ)   AT&T (T)   American Express (AXP)  
       
Johnson & Johnson (JNJ)   International Business Machines (IBM)  Intel Corp (INTC)   Schlumberger Ltd (SLB)  
       
Procter & Gamble (PG)  Tesla Inc (TSLA)   Snap Inc A (SNAP)    
       
Netflix Inc (NFLX)        

 

Bank of England responds to hot inflation print

The Bank of England will need to respond to biggest jump in inflation on record when it convenes this week. Inflation accelerated to 3.2% in August from 2% in July, well above the central bank’s 2% target. Could this force the BoE to tighten monetary policy sooner than had been expected? A hawkish-sounding Bank of England would be a boost for sterling. In order to be hawkish enough to nudge sterling higher and show it’s prepared to kill inflation as required, the Bank probably ought to end QE now – as the now ex-MPC hawk Andy Haldane argued for last time around. There is a clear risk inflation will overshoot the 4% forecast, let alone the 2% goal. Unanchored inflation expectations are the worst possible outcome for a central bank they’ve been too slow to recognise the pandemic has completely changed the disinflationary world of 2008-2020. Hikes will be required too in the not too distant future and the bank should appreciate that a bitter pill now would be better than even harsher medicine later on. A jobs market with 1m vacancies does not suggest the UK economy is in trouble at the moment. Wage growth remains strong – albeit the picture is very complex due to furlough, the pandemic and base effects + inflation on real wages.

Does the bank go for a more hawkish signal? That is harder to say: it’s already well into a taper and markets anticipate the BoE will be raising rates 2-3 times over the next couple of years – does it need to do more than that? The question is whether the inflation ready has got the right kind of attention that it deserves or whether the BoE is ignoring the red flags. My own view, for what it’s worth, is that the Bank, just like the Fed, has allowed inflation overshoots to allow for the recovery, but it’s been too slow and too generous. Much like the response to the pandemic itself, the medicine (QE, ZIRP) being administered may be doing more harm (inflation) than good (growth, jobs).

Stocks stage a bounce after Monday selloff

A battling close lifted the spirits on a very tough day for equity markets on Monday. European markets are taking that bounce at the death on Wall Street – and a firmer close for Europe – and rallying this morning after a drubbing in yesterday’s session. Basic resources leading the way – what went down furthest yesterday is bouncing the most today. Shell rallied 3% in early trade, whilst IAG continued to catch bid on the reopening of the lucrative transatlantic trade. The airline group trades +6% after a double-digit rally yesterday as the US said it would let UK and EU travellers back in. Lufthansa is also up more than 4%.

Question now is whether this rally has enough puff or if there is a tendency – as I suggested last Wednesday – to sell into rallies rather than buy the dip. Not a lot of data to get in the way and a two-day Fed meeting that starts today suggest risk appetite will be moderate for the time being. Market indicators are flashing – US 10yr swap spreads at widest in 6 months, Vix spiked to its highest since May. To answer this – have market fears that led to the sell-off gone away or been fully priced? For now, I like a -10% decline rather than just 5% but so much depends on what the Fed delivers tomorrow.

The S&P 500 closed down 1.7%, its worst daily decline since May, but rallied a solid 50pts in the last 45 minutes or so of the session. That ought to offer some encouragement for bulls that there are still dips to be bought but we should caution that the uptrend is broken, and we should look for recovery of the Sep 14-16 highs around the 4,485 mark for a sign that the downswing is over. The Nasdaq fell 2.2%. Shares in Tokyo fell 2% as it caught up following a holiday – just wait until Chinese equity markets reopen on Wednesday. Hang Seng almost flat, Evergrande down a little over 1% as the panic moderated.

European stocks closed off the lows: FTSE –0.86% at 6,904, having touched an intra-day low of 6,8027. The DAX finished –2.3% at 15,117, having hit a low of 15,132. Bid started to come through just ahead of the US cash open- which though soft – was encouraging as it marked the low of the day for the futures. 4,350 is the key near-term support for the S&P 500, eyes down for the 200-day SMA at 4,100, having tested the 100-day SMA at 4,326 with a low of 4,305 yesterday.

Briefly:

• Coinbase stock fell 3.5% as the company dropped plans to launch its Lend programme, following a major spat with the SEC.
• Tesla dropped 4% as regulators took aim at the carmaker’s self-driving function. The US National Highway Traffic Safety Administration (NHTSA) has already announced an investigation into Tesla’s Autopilot over its possible involvement a number of crashes. Now the National Transportation Safety Board (NTSB) is weighing in, calling the approach Tesla is taking “misleading and irresponsible”. Jennifer Homendy, the new head of the regulator, told the WSJ that “[Tesla] has clearly misled numerous people to misuse and abuse technology.”
• Shares in Universal Music Group surged on debut in Amsterdam, rallying +35% above the reference price after its spin-off from Vivendi, which declined 17% on the dilution. Tomorrow will be a difficult second album for the biggest listing in Europe this year.
• Minutes from the Reserve Bank of Australia reiterated that there will be no rate rise until 2024 and that the Delta variant “delayed, but not derailed, the recovery”.
• Stagecoach +17%, National Express +5% on news that they are exploring a merger that would create some big synergies and an even bigger national travel operator. Immediately I think competition concerns might be a problem. Shares in the pair have been cut by the pandemic – a tie-up makes sense.
• Return of sporting events lifted Compass, with revenues +86% over 2019 levels. Shares just traded a tad light on the news.
• Kingfisher shares down 5% to the bottom of the FTSE despite strong performance and a hike to the dividend. The interim dividend is up 40% and LFL sales up 22.8% and corresponding 2-year LFL up 21.3%. Retail profits rose 45%, though free cash flow was 30% lower as result of the reversal of working capital inflow in the prior year related to inventory. But H2 is up against some very tough comparisons as Kingfisher was a big winner from lockdowns. Management expect LFL sales to be between -7% to -3% (previously -15% to -5%), with corresponding 2-year LFLs of +9% to +13%. Full year adjusted pre-tax profit is now seen in the range of c.£910 million to £950 million. Always going to be incredibly tough for KGF after the monster rally during the pandemic on some pretty amazing performance – investors will want to see more on the longer-term strategy on how to carry on the momentum.

Elsewhere, Bitcoin dropped to its weakest since the start of August having crashed through its 200-day SMA as the entire crypto space was smashed down as it was caught up the broad market sell-off. The riskier the asset, the quicker it is to be sold in times of stress, so hardly a surprise that crypto takes a beating whenever markets turn.

New highs for the dollar were made yesterday but just seeing some pause in early trade this morning. EURUSD still looking weak and bearish MACD still in play. Bit of RSI divergence to watch that might call for a flip as dollar strength looks overdone.

EURUSD Chart 21.09.2021

GBPUSD: Again some pushback from sterling bulls this morning – RSI/MACD divergence may be calling for a rebound once the descending triangle plays out.

GBPUSD Chart 21.09.2021

What is Forex trading and how can you start?

If you’re a newcomer to the world of forex trading, it might seem a bit intimidating. In this beginner’s guide, we run through the basics so you can start your FX trading journey.

Forex trading?

What is forex?

Forex, also shortened to FX, stands for foreign exchange. In practice, it’s the exchanging and trading of different currencies.

FX is the most popular trading activity in the world. Every day, $6 trillion – more than the GDP of the UK and France put together – exchanges hands.

A number of different types of traders are involved in the FX trader, including banks, companies, individual retail investors, and even governments.

There is no centralised exchange when it comes to Forex. It’s typically done over-the-counter. Essentially, anyone can get involved – but please only commit any capital if you are comfortable taking any losses.

In our case at Markets.com, we offer FX trading via contracts for difference (CFDs). With CFDs, you do not own the underlying asset. These are leveraged products. That means you gain exposure for a fraction of the total trade’s value. However, profit and loss is gauged by the total size of your position, not your deposit, and can far outweigh your initial deposit. Your risk of loss is higher.

What makes FX trading appealing?

There are lots of reasons why foreign exchange is so popular, such as:

  • Market size – roughly $6 trillion changes hands every day!
  • Variety – We offer over 60 different currency pairs to trade at Markets.com
  • Accessibility – Unlike stocks and other assets tied to exchanges, currency can be traded 24/7
  • Leverage – As mentioned above, currency pairing CFDs allow you to open a trade at a fraction of the trade’s total value

There is also a degree of flexibility with forex.

CFDs allow speculation on price movements in both directions. If you think the currency pairing is going to lose value, you will take a short position. If you think it will gain value, you’ll take a long position.

What are currency pairs?

Currency pairs are the financial instrument used in foreign exchange.

It is a quotation for two different currencies. It’s basically the amount you would pay in one currency for another.

Let’s look at an example.

The currency pair is GBP/USD at 1.15.

That means you could exchange 1 GBP for 1.15 USD.

If one of the paired currency’s value changes, then the currency pair’s value will change too.

For example, GBP/USD has started the day at 1.15. By the end of the day, it has risen to 1.16. That is because the strength of pound sterling has risen in value against the US dollar.

If the currency pair starts the day at 1.15, then drops to 1.13, for instance, that means the value of pound sterling has weakened against the US dollar.

At Markets.com, our currency trading offer is split into three categories: Majors, minors, and exotic.

Majors are some of the most popularly traded pairs on the market, coming from the largest global economies. They’re essentially the engines of global commerce and economics. Major currency pairs include:

  • GBP/USD – Pound sterling to US dollar
  • EUR/USD – Euro to US dollar
  • JPY/USD – Japanese yen to US dollar
  • USD/CHF – US dollar to Swiss franc
  • AUD/USD – Australian dollar to US dollar
  • NZD/USD – New Zealand dollar to US dollar
  • CAD/USD – Canadian dollar to US dollar

The minor pairings are still from important economies but do not include the US dollar. These are still popular trading assets. Take a look at some examples below:

  • AUD/CAD – Australian dollar to Canadian dollar
  • CAD/JPY – Canadian dollar to Japanese yen
  • EUR/GBP – Euro to pound sterling
  • USD/DKK – US dollar to Danish kroner

Exotic pairings are pairings featuring potentially more volatile currencies. In the past, such currencies may also have had unique or difficult conversion requirements. Many come from emerging economies.

  • CHF/PLN – Swiss franc to Polish zloty
  • EUR/RUB – Euro to Russian rouble
  • GBP/TYR – Pound sterling to Turkish lira
  • USD/ZAR – US dollar to South African rand

What factors affect the currency market?

Like any financial instrument, currency pairs are affected by numerous external factors. If you’re looking to enter the world of forex trading, be aware of the following:

  • Central bank policy & interest rates – It’s the job of central banks to essentially watch over all aspects of a nation’s monetary policy. That will give it oversight over many things that can affect currency prices. Interest rates are a key part of this. If a central bank increases its overnight rate, then currency traders looking to enjoy higher yields may end up buying more. This can make currency prices rise.
  • Economic releases – Big economic releases, such as monthly, quarterly, and annual GDP growth figures, manufacturing and services PMIs, employment figures, and inflation all have an influence on FX prices.
  • Politics – It goes without saying that political tussles can affect a currency pairing’s valuation. Think how the pound slid dramatically after the Brexit vote, or how the USD wobbled in the wake of the US/China trade war under the Trump administration.
  • Volatility – The above factors will have an impact on price volatility, which can then affect how traders trade. Some may prefer to trade on volatile currency pairs; others may wish to hold off until markets fall back to normal. Be aware that some currency pairings are more volatile than others.

Some currency trading tips for beginners

  • Research – Don’t commit any of your money until you’ve done your research. Study the markets. Take time to head over to our news and analysis section. You’ll find plenty of pieces on what’s moving markets and how major currency pairs are currently fairing. The old adage fail to prepare; prepare to fail runs true here. Make sure you’re informed before placing a trade.
  • Practice – A com demo account lets you practice trades with $10,000 in demo credit to play about with. That way you can get a feel for currency markets, familiarise yourself with our platform, and see how tools can help impact your trades, in a risk-free environment. You won’t be spending any money.
  • Tools – We have a suite of powerful trading tools designed to help you. From various different charts to sentiment indicators, and much more besides, these are all designed to give you a potential trading edge. Click here to learn more about our tools.
  • Know your limits – Only trade if you are comfortable taking losses. Don’t be afraid to cut your losses either if you feel you are losing too much. Do not overextend. At the same time, don’t be tempted to take all of your potential profit out the first time it appears. You can be confident – but only you will know your own limits.

Remember: trading is inherently risky. The value of your trades can down as well as going up. Bear this in mind if you decide to take the forex trading plunge.

Stocks pick up, bonds remain bid ahead of Fed minutes

European stocks edged higher early Wednesday after taking a sharp tumble in yesterday’s afternoon session. Bonds and the dollar rallied, leaving benchmark yields at their lowest in some months, knocking the wind out of the cyclical recovery trade. The FTSE 100 ended the day down 0.9% at 7100 but has regained some poise in the early part of today’s session to trade at 7,130. European markets remain very much stuck in month-long ranges. Shell shares rose more than 2% on a promise if higher shareholder returns.

Mega cap growth helped the US market keep a more level head as the S&P 500 declined 0.2%, easing away from a record high set last week, whilst the Nasdaq rallied by almost the same amount. The Dow Jones fell 0.6% as economically sensitive names like Caterpillar, Chevron, Home Depot and JPMorgan slipped. US 10yr yields are under 1.34% this morning, a five-month low. Similar story for gilts, with the yield on 10yr paper at 0.627%, the lowest since Feb.

Yesterday’s pullback and the sharp drop in bond yields reflected doubts about the pace of growth, and the extent to which costs are going up for businesses. The talk is that peak growth is behind us and The ISM services PMI reflected the trouble for growth is not on the demand side; quite the reverse. Businesses anecdotally reported ‘supply chain outages, logistics delays and employee- and management-staffing constraints’ and that ‘business conditions continue to rebound; however, like everywhere, the challenges in the supply chain are numerous. We continue to see cost increases, delayed shipments, pushed-out lead times, and no clarity as to when predictive balance returns to this market’. I fail to see how this implies inflation will be transitory.

A run-up in the S&P 500 of 5% in the last two weeks looks to be unsustainable and at the very least I’d anticipate we see a pause and trading sideways, if not a deeper correction over the summer. For now, though, Tuesday’s dip is not a sign of reversal. The market is narrowing, too. The S&P 500 would have had a much sharper drop (~1%) had it not been for the 14 index points added by Apple and Amazon. Shares in Amazon rallied almost 5% as the US Defense department cancelled its $10bn JEDI contract with Microsoft, with the Pentagon saying it will seek a new multi-vendor contract. It will seek proposals from both Microsoft and Amazon.

The narrative and the ‘macro picture’ seem a little less understood – has growth peaked, will inflation wipe out economic gains, has the Fed really got inflation angst? We get to find out a lot more about that with today’s release of the minutes from the last FOMC meeting. Earnings season is coming up but it’s well known we are going to see some monster numbers and it is less obvious how Q2 reporting will drive the market higher – if anything it could lead to a round of profit taking and recalibration. Expectations are already so high. But we can’t ignore the bond market and equity market concentration in growth stocks – if bonds find more bid and the 10yr pushes yet lower to 1%, then the stock market can keep gliding higher.

The dollar is holding higher against peers ahead of the minutes from the June meeting. The meeting revealed a couple of things we had pretty well expected: a) Fed officials are talking about tapering, b) dots are coming in due to the rapid economic rebound and, less well anticipated, c) the Fed is a little bit concerned about letting inflation off the leash. The minutes should provide some further clarity/explanation about the Fed’s likely position but ultimately we don’t see any change until Jackson Hole in late August or the September meeting. The trouble for the market is dealing with the Fed’s reaction function in terms of yields: a hawkish Fed and quicker taper/hike ought to drive yields higher, but the reaction to the June meeting saw the reverse as the statement and projections implied the Fed wouldn’t let inflation get out of control. So now we know this, we are likely to see a more considered market reaction that, all else equal, should see rates move higher this year as the Fed lays down the tapering agenda and inflation remains more persistent than central banks think.

EURUSD made a fresh 3-month low in a further extension from the bear flag downside breakout.

EURUSD price action on July 7th 2021.

GBPUSD: firm rejection of 1.39 yesterday and continues to stick to the downtrend. For now, continues to scrap around the 1.38 area, felling just below this morning and eyeing a break to 1.3660 area, the 200-day SMA and Mar/Apr double bottom.

GBPUSD price action on July 7th 2021.

Crude oil futures catching a little bid in early trade this morning after yesterday’s reversal. Concerns remain that the failure by OPEC to agree to gently increase production could lead to the output agreement unravelling, which could lead to more crude coming on the market. But there is a lot of uncertainty – if OPEC+ stick to the current quotas global inventories will draw down further and the market will further tighten, squeezing prices higher.

Chart showing crude oil price action.

Gold is getting a filip from lower yields, though the stronger greenback is checking its advance. 10yr TIPS have slipped to –0.94%, the lowest since the middle of February as nominal rates fell. Price action remains above $1,800 with the bullish crossover on the MACD confirmed.

Gold chart showing price action 07.07.2021

Stocks firm, oil runs into technical problems

European stocks moved higher in early trade Tuesday after a sizeable down day in the previous session and a rather limp handover from Asia. The FTSE 100 recaptured 7,100, rising 0.5%, after slipping below this level yesterday, having closed down 0.9%. European indices continue to trip along recent ranges having set post-pandemic highs earlier this month as the market looks for more direction re inflation and bond yields. Everyone seems happy to buy the line that inflation will be transitory: the super-hot peaks we are getting right now will be, we knew that as base effects and pent-up demand played out; the question is what sort of new inflation regime persists beyond this summer. Once the inflation genie is out the bottle it is hard to put back in easily.

 

US markets are grinding higher along the path of least resistance but on lower vols and declining breadth. As bond yields remain in check and inflation expectations cool, big tech and other bond proxies are providing the heavy lifting for the indices. The S&P 500 inched to a new all-time high with just healthcare and utilities up and twice as many advancers as decliners. Energy was smoked, registering a decline of 3%, with Valero, Halliburton, Phillips 66, Occidental and Marathon all down 5%. Cruise operator stocks sank 6-7% as Carnival announced an additional stock sale of $500m, whilst Disney delayed a planned test voyage. Growth is beating value right now as the reflation trade unwinds: the Nasdaq rallied 1%, whilst the Dow fell 151pts as the likes of Chevron and Boeing pulled back. US 10yr yields are back under 1.5%, and this morning US stock futures are flat. After a pause, AMC rallied more than 7%. SoFi (Nasdaq: SOFI) is the most talked about stocks on Wallstreetbets, with WKHS, WISH, CLOV, BB, SPCE and GME also still garnering some of the most mentions. 

 

Among the big tech leaders making gains was Facebook, which rallied 4% to take its market capitalisation above $1tn for the first time as it saw off a monopoly legal threat. A judge rejected two antitrust lawsuits brought by the Federal Trade Commission and a coalition of 46 states. The news removed a significant headwind for the stock, though the FTC has a month to refile its complaint. It seems that the judge’s rejection of the case was based on the lack of evidence, or the way it was presented, which could be remedied with a new lawsuit.  

 

Elsewhere, in FX the dollar is mildly bid with GBPUSD testing the Jun 22th low around 1.3860 and EURUSD creeping back to 1.1910. Chart pattern looks a bit bearish and flaggy.

 

EURUSD price action chart.

Crude oil turned lower through the day after touching its best levels in almost three years. So far this market has been a buy-the-dip affair, and market fundamentals seem solid as supply remains tight, but we just need to be mindful from a technical perspective. Yesterday’s outside day bearish engulfing candle is one red flag, the bearish MACD crossover on the daily chart is another. Not necessarily the top but would call for a potential near-term pullback such as a ~10% correction as seen in Mar/Apr this year. Anyway, market fundamentals remain firm and OPEC+ has scope to increase in August – it would be about 1.5m bpd short of demand without any additional output from OPEC or Iranian oil coming back online.

Oil price movement chart.

Bitcoin – still holding under the 200-day SMA but the selling may be done now as bears tire and weak hands are out; there is a potential rip higher incoming.

Bitcoin price action chart.

European stocks edge higher, BoE meeting ahead

Stocks seem to be largely marking time until there is more clarity on economic data like inflation with the major European bourses a little higher this morning but well within ranges. Bonds are steady with US 10s around 1.5% and stocks are likely to remain similarly directionless until the former start to motor. Wednesday saw US indices essentially flat but they remain +1% higher on the week after a sharp turnaround from the Fed-induced selling last week. The Nasdaq rose marginally to notch another record high with subdued bond yields allowing investors to get back into big tech growth. More Fed speakers today to watch for in the shape of Bostic, Harker, Williams, Bullard and Barkin but the sentiment seems to be that if the Fed is going to more mindful of inflation than was judged for most of the last year then it ought to keep control of yields and allow for gently rising stock markets. I’d still be mindful of a tantrum later this year when yields ought to pick up some steam. 

 

Sterling trades close to $1.40 ahead of the Bank of England monetary policy statement today. As detailed in our preview, no change is expected but there are signs that inflation might run hotter than the MPC currently forecasts so we will be watching for any commentary around this. Yesterday’s UK PMI report pointed to strong inflationary pressures that will take CPI above the bank’s 2% target – the question is how far above and for how long – and how does the Bank respond. Bailey has made clear the MPC won’t tolerate above-target inflation for long. Could he spring a hawkish surprise today and say something like ‘inflation pressures are building and the bank has the tools to respond’?  I don’t think this is the time yet to do this, but that’s why it would be a surprise.

 

GBPUSD: near term resistance at the 1.40 round number, support holding on the 100-day line at 1.3950.

WTI made a fresh high above $74 amid ongoing expectations that restrained supply and improving demand is leading to an increasingly tight crude market. Yesterday the EIA reported crude oil stocks declined by 7.6m. Stocks at the Cushing, Oklahoma hub fell to their lowest since March 2020 and US total petroleum demand rose 20.75m bpd, getting close to pre-pandemic levels. Meanwhile OPEC is signalling a stronger oil market. Chatter is that the cartel will increase production by 500,000 bpd from August as they continue to cautiously unwind production curbs. 

 

Copper has staged a bit of comeback this week but there are some bearish indicators on the physical supply front with China releasing metal from reserves to counter rising inflation. Wednesday saw a bounce in copper as the release of 100,000 tonnes of base metals was less than expected, but this is being reversed. Import demand in the country is also reported to be the weakest since 2017, whilst LME stockpiles are 30% higher this month.  

 

Bitcoin futures just running into resistance at the 200-day line, which had acted as support during recent plunges.

Bank of England preview: when to hike?

  • No change in policy expected
  • QE on autopilot into year-end
  • Rate hike timing in focus with inflation outlook in question

Don’t expect fireworks from the Bank of England tomorrow (Thursday Jun 24th, 12:00 BST) – the Bank won’t be changing policy or announcing anything new – but there is still scope for volatility around the meeting. Inflation looks like it might be more of a problem than the Bank of England’s forecasters have led us to think.  Andrew Bailey has made it clear the MPC won’t hesitate to act on rising inflation and high frequency data indicates this could become a problem for the Bank. Considering the Fed’s move last week to signal it’s not so deaf to inflation risks as we had been led to believe, could the BoE be the next central bank to deliver a hawkish surprise? I’m not so sure – not for this meeting at least since the UK economy has a little further to go yet and the BoE is not facing any pressure to act early.

It seems unlikely that the Bank of England, absent any fresh economic projections, will seek to signal it is worried about the path of inflation at this meeting, preferring to wait for some more data over the summer as the post-lockdown spike in activity starts to wane. Nevertheless, given the QE programme seems to be an autopilot to end this year – some further tapering to be announced in due course so it keeps buying through to Dec – the market attention seems to rest firmly on the timing off lift-off for policy rates.

Current market expectations indicate hikes in Q2 next year. However, it would not be a major surprise if the Bank were to act faster due to rising inflation, with perhaps 2-3 hikes next year beginning in Q1 2022. Wage growth from a shortage of workers is one factor to consider that could make above-target more sustained without tightening so comments on the labour market will be very carefully considered. We would also need to be mindful of household savings being unleashed more than the roughly 10% the Bank expects.

CPI rose 2.1% last month on an annual basis, up from +1.5% in April. The rate of month-on-month inflation was +0.6% as the economy reopened more. Of course, base effects exert a strong influence but there are a couple of points I made at the time which I believe are important. First the core reading of +2.0% was well ahead of the consensus +1.5%. Second, watch that second consecutive +0.6% month-on-month reading, which is about more than just base effects from last year.  Couple more month-on-months like that and MPC will have to act.

Today’s PMI survey also points to strongly rising inflation. The release notes: “The rate of input cost inflation accelerated for the fifth month running and was the joint-fastest on record, equal with that seen in June 2008. While inflation continued to be led by the manufacturing sector, service providers also posted a marked increase in input prices. In turn, the rate of output price inflation hit a fresh record high for the second month running.” The evidence from the survey is strong suggestive that inflation will rise well above the Bank’s 2% – the question is how far above and for how long? Again, it’s the whole transitory question mark over inflation that is bedevilling the Fed. Anyway, right now the Bank will stand pat and not wish to deliver anything like a hawkish surprise. Tapering is underway to let QE expire by the end of the year, and this is not the time for the BoE to signal it’s in a rush to raise rates too. Over the coming weeks and months I expect markets to bring forward rate hike expectations as the BoE reacts to strong inflation readings and for this to lead to a stronger pound with cable to retest 1.4250 in Q3 2021, with a potential move to 1.45 thereafter.

Wochenausblick: Wird die Bank of England der Fed mit einem falkischen Wechsel folgen?

Die Bank of England gibt uns diese Woche vor dem Hintergrund steigenden Inflationsdrucks ein frisches Update zur Geldmarktpolitik. Werden die ersten Zahlen die Bank ins Zittern versetzen oder ist sie doch härter? Anderswo erwarten uns PMI-Zahlen aus den USA, Großbritannien und der EU, die auf einen sehr guten Mai folgen. OPEC und ihre Verbündeten sind auch beschäftigt, mit dem Beginn einer weiteren Reihe von politikentscheidenden Treffen.

Andrew Bailey und die Bank of England stehen nächste Woche im Rampenlicht. Die britische Zentralbank gibt ihre jüngste geldpolitische Entscheidung bekannt und wird voraussichtlich ihren Kurs beibehalten, obwohl dies vor dem Hintergrund eines schnellen Wirtschaftswachstums und einer steigenden Inflation erfolgt.

Es könnte ein Umdenken im Gange sein. Gouverneur Bailey hat wiederholt in der Vergangenheit angegeben, dass er keine Problem damit habe, die Politik anzuziehen, wenn die Preise dauerhaft über dem Inflationsziel der BoE von 2% liegen. In diesem Fall könnte dies ein Anstieg der Zinsen bedeuten.

Der Leitzins der BoE blieb im vergangenen Jahr im Rahmen der von der Bank erlassenen wirtschaftlichen Notfallmaßnahmen während der Pandemie bei 0,1%.

Die Verbrauchpreisinflation stieg letzte Woche vom Office of National Statistics veröffentlichten Zahlen zufolge im Mai auf das Jahr gerechnet auf 2,1% . Die Inflation Monat-zu-Monat wird bei 0,6% verzeichnet.

Es gibt allerdings keine Anzeichen dafür, dass uns eine Änderung der Zinsen unmittelbar bevorsteht. Hier ist zwar mehr im Spiel, aber ein Großteil des Inflationsdruck geht auf die Wiedereröffnung der britischen Wirtschaft und Basiseffekte aus 2020 zurück. Aber Konsequenz wird hier der Schlüssel sein. Wenn es Monat-zu-Monat zu einem weiteren Anstieg der Inflation kommt, könnte die BoE gezwungen sein, zu reagieren.

Auf der Zahlenseite werden diese Woche die PMI-Daten aus den USA, Großbritannien und der EU veröffentlicht. All diese großen Volkswirtschaften werden versuchen, auf dem beeindruckenden Schwung vom Mai aufzubauen.

So erreichte der US-PMI für das verarbeitende Gewerbe von IHS Markit zum Beispiel im Mai mit einem Wert von 61,5 seinen höchsten Stand seit Oktober 2009. Die Inlandsnachfrage und der Verbrauch kurbelten letzten Monat die US-Produktion an, aber Hersteller warnen vor Problemen in der Lieferkette durch Rohstoff- und Arbeitskräftemangel. Ein geringerer Wert im Juni könnte daher realistisch sein.

Die Expansion des Dienstleistungssektors übertrifft die Produktion. Der PMI für Mai liegt bei 70,1 und übertrifft damit den Wert von April von 64,7. Höheres Verbrauchervertrauen in Kombination mit der beeindruckende Impfleistung der USA erklären das hohe Niveau des Umsatzes der Dienstleistungsbranche.

Ebenso erlebt Großbritannien mit der Lockerung des Lockdowns im Mai ein atemberaubendes Wachstum im Dienstleistungsbereich. Der PMI der Branche erreichte 62,9 – dem höchsten Wert seit Mai 1997. Die Produktion schoss, getrieben von einer Reihe neuer Aufträge, in die Höhe und erreichte letzten Monat 65,6, ein 29-Jahres-Hoch.

Mai war auch für die Geschäfte der Eurozone ein guter Monat. Der zusammengesetzte EU-PMI von IHS Markit erreichte mit einem Wert von 57,1 ein Dreijahreshoch und liegt damit deutlich über dem Wert vom 53,8 von April. Denken Sie daran, dass ein Wachstum von einem Wert von 50 oder höher angezeigt wird. Während das Tempo also nicht so hoch war wie in Großbritannien oder den USA, zeigte die EU im letzten Monat gute Anzeichen für wirtschaftliche Widerstandsfähigkeit. Kann es das im Juni auch tun?

Um bei den Zahlen zu bleiben: der finale Wert des BIP-Wachstums der USA für das erste Quartal wird diese Woche erwartet. Der finale Wert dient als Art Bestätigung, eine Kontrolle der weiteren wirtschaftlichen Gesundheit. Der frühere Anstieg im Mai lag bei 6,4 %, was Anzeichen für eine boomende Wirtschaft zeigt. PMI-Flashpoints unterstützen dies. Auch im zweiten Quartal könnten wir ein zweistelliges BIP-Wachstum erleben.

Abseits von wirtschaftlichen Rohdaten, versammeln sich OPEC und ihre Verbündeten am Donnerstag für eine weitere Reihe Treffen. Steigende Ölpreise werden das Kartell zweifellos in gute Stimmung bringen, aber hier ist Vorsicht geboten. Jeder unerwartete Anstieg der Fördermenge könnte im Gegensatz zum aktuellen stetigen Rücknahme der Fördereinschnitte der OPEC+ zu einem Überangebot führen, trotz der zuversichtlichen Prognosen zur globalen Nachfrageerholung.

OPEC+ entschied sich im April, zwischen Mai und Juli 2,1 Millionen Barrel pro Tag zusätzlich an die Märkte zu bringen. Wir könnten diese Woche das Zusammenkommen eines größeren Plans für eine Rücknahme der Fördereinschnitte für die Zeit nach Juli sehen.

Das Kartell bleibt bei seinem optimistischen Ausblick hinsichtlich der Öl-Nachfrage. Ihr monatlicher Bericht geht davon aus, dass die Nachfrage um 6,6% auf 5,95 Millionen Barrel pro Tag für 2021 steigen würde. Die Vorhersage blieb für den zweiten Monat in Folge unverändert.

Was die OPEC und ihre Verbündeten von hier an unternehmen werden, wird entscheidend sein. Da WTI und Brent jetzigen Zeitpunkt über 72 und 74 USD erreichen, einige der höchsten Preise seit Jahren, sind die Anzeichen für eine verstärkte globale Ölnachfrage vorhanden – aber jedes Überangebot könnte die Waage zurück zu einem Rückgang anstelle eines Preiswachstums führen.

Top Wirtschafts-Daten

Date  Time (GMT+1)  Asset  Event 
Mon 21-Jun  2.30am  AUD  Retail sales m/m 
       
Wed 23-Jun  8.15 am  EUR  French Flash Manufacturing PMI 
  8.15 am  EUR  French Flash Services PMI 
  8.30 am  EUR  German Flash Manufacturing PMI 
  8.30 am  EUR  German Flash Services PMI 
  9.00 am  EUR  Flash Manufacturing PMI 
  9.00 am  EUR  Flash Services PMI 
  9.30 am  GBP  Flash Manufacturing PMI 
  9.30 am  GBP  Flash Services PMI 
  1.30 pm  CAD  Core Retail Sales m/m 
  1.30 pm  CAD  Retail Sales m/m 
  2.45 pm  USD  Flash Manufacturing PMI 
  2.45 pm  USD  Flash Services PMI 
  3.30pm  OIL  US Crude Oil Inventories 
       
Thu 24-Jun  All Day  OIL  OPEC+ Meetings 
  12.00 pm  GBP  MPC Official Bank Rate Vote 
  12.00 pm  GBP  Monetary Policy Statement 
  12.00 pm  GBP  MPC Asset Purchase Facility Votes 
  12.00 pm  GBP  Official Bank Rate 
  1.30pm  USD  Final GDP q/q 
  3.30pm  GAS  US Natural Gas Inventories 

 

Top Geschäftsberichte

Date  Company  Event 
Mon 21-Jun  Naspers  Q4 2021 Earnings 
     
Wed 23-Jun  Markit  Q2 2021 Earnings 
     
Thu 24-Jun  Nike Inc.  Q4 2021 Earnings 
  Accenture plc  Q3 2021 Earnings 
  FedEx Corp.  Q4 2021 Earnings 

UK preliminary GDP q/q preview (Wed, 07:00 BST)

The Bank of England anticipates UK economic output contracted by 1.5% in the first quarter of the year, which should be pretty much our reference point for the print on Wednesday, with the consensus at –1.6%. The –2.2% in January was stronger than expected and was followed by a 0.4% expansion in February. Whilst March data does not capture the reopening of non-essential shops, there is evidence that spending and activity were already picking up before the Apr 12th easing of lockdown restrictions. Moreover, the UK economy has proved to be a lot more resilient to lockdown 3 than lockdown 1. Put that down to the adjustment of people and business to the displacement; for instance the embrace of remote working, as well the lockdown rules themselves being less restrictive to economic activity than the first lockdown a year before. Better and more comprehensive testing has also played an important part in keeping in most economic activity going.

The March IHS Markit / CIPS services PMI showed a strong rebound in March, with the index rising to 56.3 from 49.5 in Feb. The robust PMI coupled with other evidence of increased card spending and mobility suggest a solid bounce back in the final month of the quarter, with a month-on-month expansion of around 1.3% expected. Whilst not a direct read on the Q1 numbers, Barclays today says that April card spending has exceeded pre-pandemic levels.

But this all remains rear-view fare: the market is more interested in the +7% growth expected in 2021 which is going to imply some pretty impressive expansion in the third and fourth quarters in particular. Strongest expansion since WW2 is more eye-catching than a mild contraction in Q1 that has been well and truly priced. Going forward, we are not really going to know what the true size of the economy really is for some time because there has been a huge displacement in economic activity as well as the velocity of people. Adjusting to this new normal will take time and measures of output will always lag what is really happening. Moreover, as Friday’s nonfarm payrolls report in the US evinces, hard data is liable to being way off forecasts because it’s so hard to get a handle on what we are comparing it with; furlough and other emergency schemes masked the true depth of the economic contraction. Just as the pandemic led to an unprecedented contraction, there is not really a playbook for this recovery, so we should be careful not to over-read individual prints.

By way of context, the NIESR this morning estimates that the UK economy will recover 2019 levels by the end of 2022. The recovery is strong but it’s coming from a low base. To add further context, as of Feb the British economy remains 7.8% smaller than it was a year before. Moreover, it is still 3.1% below where it was at the peak of the post-lockdown recovery in October 2020 – evidence that this long third lockdown over the first quarter has set things back some way. NIESR also estimates that UK unemployment will peak at 6.5% rather than 7.5%, reflecting the extent to which government support schemes have masked what is really going on.

Chart showing UK GDP performance.

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