Macroeconomic & Geopolitical

Transitory is the Name of the Game

July 2021 – 3 min read
Muted reaction to a high U.S. CPI reading confirmed markets believe the Fed is heading to a policy mistake following recent upward shift in median dots. In the U.S., we watch the release of flash PMIs, while the ECB should adjust policy strategy. In Asia, Japan CPI remains benign.


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


  • Markit flash PMIs for this month will be released July 23. We will watch the second derivative to gauge if there’s a shift from extremely fast, to slower (but still fast) growth.
  • Housing starts and permits are expected to remain robust. Demand is strong despite recent volatility; with low inventories, this will support new home construction.


  • Expect the ECB to adjust forward guidance to its new policy strategy when it meets July 22. It will likely prolong or increase asset purchases but may wait until fall, when there’s more clarity around the Delta variant. A rise in euro area inflation expectations, now stuck around 1.5%, would be a sign of success.

Asia Pacific

  • Japan CPI should remain muted, but rising PPI amid elevated commodity prices could lead policymakers to address margin pressures and the resulting impact on business investment and wage growth.
  • South Korea export growth could moderate following months of impressive gains. Expect still-elevated levels amid robust DM demand.  

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