Home Fixed interest Marketmind: peak growth, Delta’s woes and end of reflation trade

Marketmind: peak growth, Delta’s woes and end of reflation trade

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The headquarters of the European Central Bank (ECB) is seen in Frankfurt, Germany on March 7, 2018. REUTERS / Ralph Orlowski / File Photo

A look at the day ahead from Karin Strohecker.

While things may be a bit of a blur for enthusiastic England fans this morning, the markets appear to have decided the end is nigh for reflation trading.

Stocks are feeling the pain, thanks to a drop in tech stocks, with European stock markets pointing to a decline, while US Treasuries have rallied again, pushing their yields lower for an eighth consecutive day.

This was good news for the dollar, which hit nearly three-month highs. Bond markets from Germany and Italy to China joined the fixed income rally.

Markets fear growth has peaked and that the Delta variant, fueling an increase in coronavirus cases around the world, could stifle the economic recovery.

The much-anticipated Fed minutes from last night weren’t really mentioned this morning. They showed officials last month felt that further substantial progress on the US economic recovery “was generally considered to have not yet been achieved,” but agreed they had to be ready to act.

It is a great day for the ECB, which will announce the result of a review of its 18-month strategy, redefining its inflation target and setting the role it intends to play in the fight against climate change. The bank should focus on 2% and drop the current “below but close to” preamble, probably stating that the target is symmetrical as well.

But the ECB is not alone in focusing on climate change: Japan’s central bank will likely offer long-term interest-free funds to commercial lenders who provide loans or investments for activities aimed at combating change. climate, sources said.

A fairly calm day in corporate news, with Deliveroo (ROO.L) shares rising after reporting an 88% jump in second-quarter orders to 78 million.

Key developments that should give more direction to the markets on Thursday:

– The ECB will unveil its adjusted inflation target and its role on the climate on Thursday

– UK house prices increase the most since 1988-RICS UK Housing Survey

-German exports up 0.3% in May

-Meeting of the central bank of Poland

-Meeting of the Central Bank of Malaysia

-Results Europe: OMV, Wallenstam, Persimmon, Hansen, Entra

Report by Karin Strohecker, edited by Dhara Ranasinghe

Our Standards: Thomson Reuters Trust Principles.

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