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© Reuters.
Noreen Burke
Investing.com-In terms of economic data, the week following the release of the US employment report is usually one of the weakest weeks of the month, and the upcoming holiday shortened by one week is no exception. After last month’s hawkish shift triggered market turmoil, Wednesday’s Fed meeting minutes may give investors insight into the behind-the-scenes discussions of policymakers. The European Central Bank will also release the latest meeting minutes, while China will release the most closely watched inflation data. As the market enters the second half of the year, investors are asking whether the amazing performance in the first half of the year can continue. This is the knowledge you need to start the week.
- Fed meeting minutes
The minutes of the Fed’s June meeting will be released on Wednesday, when officials began negotiations on curtailing bond purchases and stated that the rate hike may be earlier than previously expected.
The minutes of the meeting were released after Friday’s non-agricultural employment report, which showed that the United States set a record in June for 10 months, indicating that as the reopening continued, the economy ended the second quarter with a strong momentum.
The strong data has hardly alleviated concerns that the strong recovery and rising wages may prompt the Fed to begin loosening monetary policy earlier than expected.
Before the Fed’s July policy meeting and August’s annual meeting in Jackson Hole, Wyoming, this dynamic looks set to continue to put pressure on the market.
- ISM service data
The service industry activity is scheduled to be announced on Tuesday and is expected to continue to grow strongly after hitting a record high in May, as the reopening is possible due to the coronavirus vaccine. The report may also emphasize continued labor restrictions, as recruitment continues to lag, causing companies to offer higher wages to attract employees.
The job vacancies and labor mobility report on Wednesday may echo this theme. The vacancy is expected to set a new record, but given that potential employees are either unable or unwilling to accept jobs, recruitment numbers will continue to lag far behind.
Investors will also pay attention to the data on the number of initial jobless claims on Thursday. Last week’s report showed that this number fell to the lowest level since March 2020, when extensive lockdown measures were implemented to slow the first wave of the pandemic.
- Second half
As the market enters the second half of 2021, investors now want to know whether the amazing performance in the first half of the year can continue.
Although the US stock market remains near historical highs, some market analysts point to signs of caution in certain areas of the market.
Travel and leisure stocks and value stocks have been dragged down by concerns about the rapid spread of COVID-19 Delta variants, while US government bond yields remain sluggish due to fears that the Federal Reserve may be more hawkish.
In recent weeks, some investors have also noticed that the market’s gains are concentrated on fewer stocks, and some see this as a sign of declining confidence in the broader market.
Investors will now turn their attention to the second quarter earnings season and the progress of President Joe Biden’s infrastructure bill, which may help the stock market maintain momentum.
- Minutes of the European Central Bank Meeting
The European Central Bank will announce the results of its June policy meeting on Thursday. As part of the ECB’s strategic review of its monetary policy, ECB observers will also pay close attention to news of several meetings to be held in the coming weeks.
The bank hopes to revise its inflation target-currently set close to but not more than 2%-and plans to complete the review by September.
On Wednesday, the Eurozone powerhouse Germany will release data, and the European Commission will release the latest data from the European Union.
- China inflation
China will release data on Friday and Friday. Market observers will pay close attention to the soaring raw material costs due to rising commodity prices and whether these increases will be passed on to consumers.
Prices in China and around the world are rising, heightening concerns that the inflation wave, if it continues, may threaten the recovery of the global economy.
——Reuters contributed to this report
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