US inflation data came in above forecasts, rising by its highest annual rate since 2008, but there was little reaction from the bond markets. This week will bring the US Federal Reserve meeting, where we will get an insight into the central bank’s current thinking.

US employment numbers were the focus of financial markets, falling short of consensus forecasts, while agricultural commodity prices soared. This week is forecast to bring a further jump in US headline CPI numbers to 4.7%, as well as the monthly meeting of the European Central Bank.

The scale of President Biden’s $6 trillion budget plans impressed the markets. US Federal Reserve members addressed the ‘talking about tapering’ issue, nonetheless failing to lift the US dollar, which hit a three year low against China’s renminbi. 

Bond markets took the latest Federal Reserve commentary in their stride, while equity market volatility jumped on fears of ‘crypto-contagion’.

This week should bring further confirmation of the global rebound in economic activity, as well as more insight into the US Federal Reserve’s claims of ‘transitory’ inflation pressures. 

US Treasury Secretary Janet Yellen rattled both bond and equity markets globally with comments about interest rate hikes, before offering reassuring words on inflation.

This week brings PMI data from around the world, with expectations of historically high numbers as economies rebound.

US quarterly earnings largely beat expectations, although any shortfalls, such as Netflix new subscriber numbers, were swiftly punished by the markets. 

The first quarter was characterised by renewed optimism, boosted by stimulus packages and vaccine rollouts. This brought a sector rotation in the equity markets, from growth to value stocks.

US equity markets made new record highs, spurred on by strong consumer spending, while the post-pandemic bounce saw China’s GDP growth rate hit record levels. This week brings a raft of quarterly earnings from major US companies, such as Johnson & Johnson and Netflix.

Equities rallied as government bond markets were reassured by the US Federal Reserve, with the tech heavy Nasdaq index at the forefront of gains. This week the focus will be on US inflation and retail sales data, as well as the expected rebound in China’s GDP after the pandemic-struck first quarter of 2020.

President Biden’s infrastructure stimulus package, worth $2.25 trillion, stole the headlines and will be much debated in Congress over the coming week. Elsewhere, as strong survey data came through, China’s currency fell to the lowest point since the trade war with the US, on expectations that monetary stimulus measures will soon be withdrawn.