Friday’s U.S. employment report is widely seen as the key that could unlock the door to Fed tapering. However, payrolls will still need to be strong, at least to a degree, or November’s FOMC meeting might yet turn out to be a damp squib. Mark Pender and Jeremy Hawkins look at what’s expected and discuss the other potential market-moving data and events this week.

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UP 255: The Fed’s payroll path to tapering.

Earlier today the FOMC indicated that it will soon begin the, potentially protracted, process of normalising U.S. monetary policy. By contrast, on Tuesday the Bank of Japan and the People’s Bank of China signaled that they are in no rush to follow suit and both the Swiss National Bank and the Bank of England are also seen holding steady on Thursday. Either economic cycles are now moving out of sync or at least one central bank has got it wrong.

UP 254: Fed toes tapering as other central banks stand pat.

Sub-zero readings on many of Econoday’s economic consensus divergence indices (ECDIs) confirm an unexpectedly large hit to global activity rates from the Delta variant. Price pressures may be easing slightly but the combination of slowing growth and above target inflation poses a real problem for policymakers. The team discuss the latest developments and their implications for policy in this month’s global podcast.

UP 253: Fed tapering would mask slowing global growth

An interest rate hike by the Reserve Bank of New Zealand looked nailed on today but Covid developments may now dictate otherwise. In any event, a tightening there would be an outlier. Terry Sheehan and Jeremy Hawkins discuss the latest global economic developments that suggest policy rates elsewhere are still going nowhere in a hurry.

UP 252: RBNZ tightening in doubt as Covid clouds the global recovery

Terry Sheehan and Jeremy Hawkins look ahead to Friday’s U.S. employment report and discuss more general recovery prospects in the context of raw material shortages, the spreading Delta variant and sharply rising consumer prices. Thursday’s BoE MPC meeting and the possibility of an early end to QE as well as future potential changes at the Fed are also in focus.

UP 251: US payrolls preview and the BoE’s QE call

The combination of the rapidly spreading Delta variant and some slightly less dovish sounding central banks is giving stock market investors pause for thought. Jeremy Hawkins looks ahead to Thursday’s ECB meeting and considers whether the central bank can bolster confidence in a non-inflationary economic recovery in Europe.

UP 250: Are the PMIs offering accurate indications of the reopening economy?

PMIs in Europe as well as similar business surveys in the US have been posting record scores in contrast to subsequent definitive data which have often been no better than mixed. Jeremy Hawkins and Mark Pender discuss the importance of PMIs to policy makers and forecasters, looking at their sampling structure and methodology for explanations to the ongoing disconnect.

UP 249: Are the PMIs offering accurate indications of the reopening economy?

Major dislocations between demand and supply continue to put upside pressure on final product prices but most central banks remain convinced that rising inflation will be short-lived. The team discusses the likelihood of future policy tightenings being delivered sooner rather than later.

UP 248: Central banks stick to their guns

Global demand continues to recover more quickly than output which remains restrained by shortages of raw materials. For many countries the growth gap has yet to drive up final product prices but an exception may be the US where prices are indeed jumping as the country benefits from an early reopening that has yet to unfold in many other economies.

UP 247: Demand soaring but inflation mixed; Covid reopenings uneven

The basic message from global central banks is holding, that inflation pressures now building will soon fade and that rate hikes are still well down the road.

UP 246:Inflation yet to shift monetary policy

Federal Reserve communications are approaching the inflection point on when to signal the withdrawal of stimulus. For Europe, this pivot is still more distant given lagging vaccination rates and lagging economic performance.

UP 245: How and when to signal the policy shift

Wild bumps for US data are due to comparison distortions, an effect that is expected to be temporary and which would not derail Federal Reserve plans for extended stimulus. Steady policy for the Swiss National Bank, given a falling franc, is also the expectation. Jeremy Hawkins and Mark Pender also discuss the UK's performance amid developing tensions with the EU over vaccine production and availability.

UP 243: Status quo for Fed and SNB; 'vaccine war' for UK-EU

Despite the recent rise in long rates, neither the Federal Reserve nor the Bank of England are likely to make any QE adjustments. Covid cases have been coming down and vaccination rates going up in both the US and UK, in sharp contrast to the Eurozone where the outlook is becoming more uncertain.

UP 242: The Fed and BoE likely to hold policy steady; vaccine issues cloud Eurozone prospects

With vaccines rolling out and Covid cases coming down, our team updates the outlook for inflation and long-term interest rates and what it may or may not mean for any changes in central bank policy.

UP 240: Inflation climbing, yields jumping, policy in question

Inflation may still be well below target but it is on the rise as are long-term interest rates. How these factors are affecting the financial markets and monetary policy and what they mean for central-bank communication strategy are points of this week's discussion.

UP 239: Inflation up, rates up; how to communicate policy change

A weekly economic recap of U.S. market activity and events.

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