Not far behind
Today's news headlines:
‘UK economy grows 4.8% in second quarter’. Coronavirus restrictions were gradually eased over the second quarter allowing many businesses, previously forced to close, to re-open and return to some kind of normality. Despite the headline figure of 4.8% quarterly growth, the UK still remains 4.4% away from the highest levels of production last seen in 2019, before the pandemic began. In comparison, the UK appears to be lagging behind at its current pace, with the US back to pre-pandemic levels of output and the EU currently just 3% away. (Financial Times)
‘Tapering of asset purchases could start as soon as this year, says Fed’s Daly’. Top Federal Reserve official Mary Daly has hinted that tapering monetary stimulus could begin later this year, given the current speed of the economic recovery in the US. With inflation hitting 5.4% year-over-year yesterday and the labour market recovering at an impressive pace, adding 943,000 jobs last month. Raphael Bostic has echoed similar notions, suggesting inflation is already at a stage where the tapering of bond purchases is justified. (Financial Times)
The S&P 500 closed 0.250% higher yesterday, while the Nasdaq ended the session 0.160% lower after markets absorbed the latest US inflation read. The US 10-Year Bond Yield has stepped off this morning to around 1.343%. In currency, Cable has been mostly rangebound in the $1.38s overnight with a similar story in EUR/USD, as it trades around the mid $1.17s. US Producer Price Index is the main feature of the data calendar today.
Japan Producer Price Index y/y: 5.6% vs 5.0% last month
UK Preliminary GDP q/q: 4.8% vs -1.6% previously
UK Industrial Production m/m: -0.7% vs 0.6% last month
UK Manufacturing Production m/m: 0.2% vs 0.1% last month
US PPI and Core PPI m/m: 1:30PM
US Unemployment Claims: 1:30PM
GBP/USD – 1.3861
GBP/EUR – 1.1812
EUR/USD – 1.1738
USD/CAD – 1.2519
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