Macroeconomic & Geopolitical

Summer Boom Meets COVID Concerns

July 2021 – 3 min read
Technical factors, perceived Fed hawkishness, the Delta variant, and U.S. infrastructure talks led to a volatile week in markets, which should remain near-term amid COVID concerns and until monetary policy clears up in fall. Solid economic data supports our strong-growth outlook.

Watchlist

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

U.S.

  • The FOMC meeting next week will get attention given the upward surprise in inflation, but we don’t expect any change in signaling future plans for tapering asset purchases.
  • The advance estimate of Q2 GDP comes out July 29, while the Employment Cost Index will show if wage pressures are increasing.
     

Europe

  • We will watch consumer and business confidence, particularly given the proliferating Delta variant. Retail sales data in major economies will show consumers’ strength this summer.
  • The release of Q2 GDP on July 30 should highlight the strength of Europe’s rebound.
     

Asia Pacific

  • Japan activity data should show a sequential bounce, with the industrial sector remaining robust given resilient exports. All eyes will also be on the Tokyo Olympics, which officially open July 23 amid rising cases.
  • We’ll see whether the spread of the Delta variant is affecting China Non- Manufacturing PMI.

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Matteo Cominetta

Director, Head of Macroeconomic Research

Agnès Belaisch

Managing Director, Chief European Strategist

Bonnie David

Assistant

Christian Floro

Associate Director

Kathryn Asher

Associate Director, Economist

Christopher Smart, PhD, CFA

Chief Global Strategist & Head of the Barings Investment Institute

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