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LGT Navigator: ECB and US inflation in focus

June 10, 2021

The European Central Bank (ECB) will announce its decision on monetary policy direction today. Against the backdrop of increased inflation expectations, it is eagerly awaited whether ECB President Lagarde will provide an indication of a reduction in monetary stimulus. A further indication of the inflation trend will be provided by the consumer price data from the US due this afternoon.

ECB monetary policy decision in focus

Prior to today's interest rate decision by the ECB (13:45 CET) and the figures on the inflation trend in the United States (14:30), investors remained cautious. In New York, the Dow Jones Industrial ended Wednesday's trading at 34'447.14 points, a daily loss of -0.44%. The market-wide S&P 500 also declined, down -0.18% to 4'219.55 points. Meanwhile, on the tech stock market Nasdaq, the indices held a little better: the Nasdaq 100 remained virtually unchanged from the previous day at 13'814.94 points (+0.03%) and the Nasdaq Composite at 13'911.75 points (-0.09%). On Asia's stock exchanges, the trading ranges on Thursday also kept within narrow limits.

More movement was observed in the bond market, where in the run-up to the eagerly awaited US inflation data the yield of ten-year US government bonds declined to 1.49% from about 1.53% mid-week. Should consumer prices in the US rise even more strongly than economists are forecasting – the consensus is for a rise in the full-year inflation rate from +4.2% in April to +4.7% in May and in the core rate from +3.0% to +3.4% – this could lead to an adjustment of inflation expectations on the capital markets and a faster reduction of the stimulus by the Federal Reserve.

G7 challenged not only, but above all, on climate protection

In the run-up to the summit meeting of the heads of state and government of the seven largest industrialized nations (G7) in the United Kingdom, which begins today, calls for concrete efforts to protect the climate are growing louder. Carbon dioxide emissions should be reduced more quickly and more strongly than has been promised so far, and the financial resources promised so far for climate protection should also be expanded, demanded the development organization Oxfam International, for example. Combating the effects of climate change is likely to be one of the focal points of the summit and US President Joe Biden's first visit to Europe. High on the agenda, however, will certainly be pandemic control and geopolitical issues. The G7 comprises the USA, Canada, Great Britain, Germany, France, Italy, and Japan. Representatives of the European Union will also be at the table.

OECD leading indicator signals steady economic recovery

According to the leading indicator of the Organization for Economic Cooperation and Development (OECD), a sustained recovery can be expected in most major economies. The OECD's leading indicator is designed for the long term and is intended to detect early signs of economic turning points. It should be possible to anticipate such a turning point relative to the trend six to nine months before the change.

Economic Indicators June 10

MEZ Country Indicator Last period
08:45 FR Industrial Production (April, m/m) +0.8%
10:00 IT Industrial Production (April, m/m) -0.1%
13:45 EZ ECB Monetary Policy Announcement
14:30 EZ ECB Press Conference
14:30 US Consumer Prices (May, m/m) +0.8%
14:30 US Consumer Prices (May, y/y) +4.3%
14:30 US Core Consumer Prices (May, y/y) +3.0%
14:30 US Initial Jobless Claims (weekly) 385,000


Earnings Calender June 15

Country Company Period
SWE H&M Q2 Sales
US Oracle Q4


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Source: LGT Bank (Switzerland) Ltd.

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