Today, markets will witness the outcome of the European Central Bank’s monetary policy negotiations and US inflation figures, which are one of the most anticipated numbers ahead of the Fed meeting next week. In the Czech Republic, we will learn about domestic inflation in May, and analysts expect an average of 3.2%. European stock traders are cautiously optimistic, and futures contracts suggest that Europe is opening slightly higher. The euro against the dollar is down 0.2% in the morning, the Czech koruna against the euro.
Most of the Asian stock markets have grown today. The yuan jumped overseas after the US and Chinese commerce ministers agreed in a phone call to boost trade and investment ties. This was their first phone call since US President Joe Biden took office in January of this year. In another move, Biden rescinded yesterday’s executive orders under which former US President Donald Trump attempted to block popular Chinese communication apps Tiktok and WeChat in the United States. Trump said the new administration of President Joe Biden wants to examine for itself whether the apps threaten the national security of the United States.
Major European stock index futures contracts: Euro Stoxx 50 at zero green, FTSE 100 + 0.1%, CAC 40 + 0.1%, DAX at zero green. US stock futures were mostly up slightly, and the mini Nasdaq 100 futures contract was down 0.1%.
US 10-year yields widened below 1.5%, suggesting support for the view that a pandemic recovery will require a temporary pickup in consumer inflation. Rising commodities was one of the main bets on a return to inflation, but it continued to stagnate. Oil prices fell this morning after yesterday’s report on rising fuel supplies in the US. Gold was also trending lower.
According to consensus, today the European Central Bank will leave its monthly asset purchases under the PEPP emergency program at around €85 billion for the third quarter. ECB economists’ expectations are unlikely to change significantly, except for a mention of a slight deterioration in economic activity in the first half of this year and an estimate of faster inflation throughout this year.
In the Czech Republic, analysts estimate annual inflation rose to an average of 3.2% in May from 3.1% in April. According to economists, given the lower base effect from last year, inflation is expected to peak in May, especially with regard to fuel prices. However, it should still be around three percent.
In the case of US inflation in May, according to Bloomberg, the consensus sees it at 4.7%, after adjusting for volatile food and energy prices to 3.5%.