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Macroeconomic & Geopolitical

Still Searching for (Lasting) Inflation

29 April 2021 - 3 min read

Markit flash PMIs suggest European economies are improving. In the U.S., stimulus and reopenings drove the composite PMI to a record high, and consumer confidence is rising sharply. Elsewhere, the BOJ revised growth projections higher amid strong external demand.


Arrows indicate consensus forecast compared to the previous period. Local dates of release.


  • The April employment report is set to show more strong job gains as restrictions ease. Low-wage sectors should drive gains, which are set to distort average hourly earnings data.
  • We will watch April ISM indices, notably the prices paid index, to gauge input price pressures. Our baseline outlook (see below) expects this to be temporary, but persistent pressures priced in would raise odds of our Inflation Anxiety scenario.


  • We will watch to see if hard data matches soft data for March EZ retail sales, as PMI data suggests consumers are adjusting to spending from home.
  • Monetary policy shouldn’t change at the BOE meeting. However, with QE running slightly more than £4 billion in gilt purchases weekly, the focus will be on which point the Monetary Policy Committee chooses to slow the pace later.

Asia Pacific

  • China Services PMI should continue to show signs of recovery, especially as accelerating vaccinations pave the way for services consumption to catch up.
  • China trade data will provide clarity on external demand, which has been a source of strength since last year.
  • Japanese markets are closed May 3–5 to commemorate Golden Week. Separately, Chinese markets will be closed on May 4 for Labor Day.

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