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LGT Navigator: US inflation data could provide new impetus

September 14, 2021

After a weak trading week, most stock indices were able to stabilize on Monday despite continuing uncertainties. With excitement, the latest data on inflation trends in the United States are expected this afternoon.

US inflation data could provide new impetus

The Dow Jones Industrial closed Monday +0.76% higher at 34'869.63 points and the broad S&P 500 gained +0.23% to 4'468.73 points. Overall, the beginning of the week lacked impetus and the stock market sentiment remains inhibited by the uncertainty factors pandemic, monetary policy, and inflation. The focus today is on consumer prices in the US. After the inflation rate last climbed to +5.4% in July, economists do not expect an easing for the time being and forecast a continued high inflation rate of +5.3% in August. Another highlight is the product presentation of Apple. The iPhone maker will unveil new products starting at 19.00 CET and is expected to include the next generation iPhone – the iPhone 13.

ECB Director Schnabel does not expect permanently higher inflation

Likely, inflation will again weaken noticeably in the coming year, Isabel Schnabel, Director of the European Central Bank (ECB), is convinced. The current strong increase in inflation rates must be interpreted with caution considering the very low inflation in the previous year. However, the ECB will keep a watchful eye on further developments and is ready to act if necessary, she said. In August, the inflation rate in the euro area had risen to three percent, reaching its highest level in 13 years. According to ECB Director Schnabel, a further increase is expected by the end of the year due to the shortage of raw materials and the disruption of supply chains. But from next year onward, inflationary pressures should weaken significantly and, over time, fall back below the two percent target. A premature tightening of monetary policy could stall the upswing in the eurozone, Schnabel warned.

German wholesale prices at highest level in 37 years

Wholesale prices in Germany rose by +12.3% over the year in August, the strongest increase since October 1974 at the time of the oil crisis. In the previous two months, wholesale prices had already risen sharply by +11.3% in July and by +10.7% in June. The background to this is, on the one hand, the price development of many raw materials and intermediate products and, on the other hand, the base effect resulting from the low price level a year ago when the corona crisis fully impacted on prices.

British tariffs on EU imports have risen significantly since Brexit

Consumers and businesses in the UK have paid the equivalent of around EUR 2.6 billion in customs duties from the start of the year to July, an increase of +42% over the year. This is the conclusion of a study by accounting firm UHY Hacker Young based on government data. In addition, the import of EU goods has become more complicated and costly after Brexit due to increased bureaucracy.

 

Economic Indicators September 14

MEZ Country Indicator Last period
08:30 SZ Producer Prices (August, y/y) +3.3%
09:00 SP Consumer Prices (August, y/y) +3.3%
14:30 US Consumer Prices (August, m/m) +0.5%
14:30 US Consumer Prices (August, y/y) +5.4%
14:30 US Core Consumer Prices (August, y/y) +4.3%

 

Earnings Calender September 14

Country Company Period
SZ Roche "Pharma Day"

 

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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