Every Friday, Brian Jacobsen provides perspective on key events and topics of the current week and his thoughts about what the week ahead may hold. Here’s his report for the week of June 5–11, 2021.

The week that was

·         The European Central Bank (ECB) didn’t make any changes to the stance of monetary policy at its latest meeting. The monetary authority for the eurozone said it will maintain a faster pace of bond purchases over the coming quarter compared with the pace over the first months of the year. The ECB estimates that the total amount of bonds it will buy will be 1.85 trillion euros. In March, the ECB announced it would shift some of those purchases to be sooner rather than later to help lower borrowing costs to help support the economic recovery. ECB President Christine Lagarde sounded more optimistic about the economic outlook, but she cautioned that it’s too early to start talking about exiting the ECB’s asset purchase program.

·         In the U.S., the Consumer Price Index rose 0.6% month over month in May. Compared with May 2020, the index is up 5.0%. Prices have gone up in the wake of strong consumer demand from government stimulus, the reopening economy, and supply chain issues that have led to depleted inventories and a building backlog of orders. Average hourly earnings rose 0.5% month over month (2.0% year-over-year), so wages have not kept up with the rise in consumer prices.

 

Economics:

·         The Group of Seven (G-7) finance ministers agreed that the minimum corporate tax rate should be 15%. Republicans in the U.S. Senate said they will oppose the agreement, so the agreement will likely have little legal effect.

·         China’s year-over-year consumer inflation rate rose to 1.3% in May. The country’s producer inflation rate rose to 9.0%.

·         In the U.S., there were a record 9.3 million job openings in April, according to the Bureau of Labor Statistic’s Job Openings and Labor Turnover Survey. The quits rate (the percentage of people voluntarily quitting) hit a record high of 2.7%.

·         The Bank of Canada didn’t make any changes to the stance of monetary policy. It said the increase in inflation is largely due to temporary factors.

 

Politics:

·         In Mexico, President Andrés Manuel López Obrador’s party lost its supermajority in mid-term elections. The leftist President was hoping to push through constitutional reforms, but that will become more difficult now.

·         In Germany’s regional elections, outgoing Chancellor Angela Merkel’s Christian Democratic Union/Christian Socialist Union alliance gained two percentage points, suggesting her alliance could fare well in the upcoming national elections.

·         In Peru, left-wing activist Pedro Castillo won a close election for president.

 

The week to come

·         It’s Federal Reserve week! The Federal Open Market Committee releases its policy statement on Wednesday.

·         U.S. retail sales and industrial production for May will be released on Tuesday. That evening, China releases its industrial production and retail sales data.

·         On Wednesday, U.S. building permits and housing starts for May will be released. U.K. inflation data will also be released.

·         U.K. retail sales for May will be released on Friday.

Thanks for reading, stay informed!

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