Staff of Reuters 5 minutes Read this article (Repeats item published Friday, no changes to text) (Reuters) – LONDON, July 5 (Reuters) – The following are five major themes that are expected to dominate investor and trader thought in the coming week. 1/THINKING AHEAD Can the market’s rapid and furious run of the last 15 months continue into the second half of 2021? The first half of H1 featured some stunning action: Oil climbed 45 percent, a popular’meme’ stock soared more than 2,500 percent, and Brazil’s currency went from zero to hero. However, because to all of the stimulus money, yearly inflation in the United States is now around 8%, compared to just 3% on average for the prior 100 years. There are many known unknowns, as Donald Rumsfeld, who died on Tuesday, said about something quite different. COVID-19 is one, but according to BofA, only a market crash would prevent the Fed from reducing support before the end of the year. Q3 might be a rocky trip, given how much markets enjoy cheap money.- The financial markets are running at full throttle in the first half of 2021, thanks to a fast and frantic first half. 2/ LOWE FOR LONGERTHe Reserve Bank of Australia meeting on Tuesday is building up to be a major event. The RBA’s three-year yield target and bond-buying program will be decided, and the language on the rate outlook could change. At the very least, there’s a hint: Either the RBA rolls over the cash-rate yield objective of 0.1 percent from April to November 2024 bond lines, signaling steady rates until then, or it doesn’t, leaving the door open for a move sooner. Investors will be watching Governor Philip Lowe’s unusual post-meeting news conference in anticipation of a rate hike in 2022. Because the US Federal Reserve has turned more hawkish, it may be time for the RBA to follow suit. – POLL: Australia’s central bank appears to be implementing ‘flexible’ quantitative easing, with rate hikes expected in 20233/ FED WATCH Following a hawkish move that roiled markets last month, the Fed’s June meeting minutes will be reviewed on Wednesday. Policymakers pushed out the start of their first rate hikes from 2024 to 2023, and they started talking about how to stop buying bonds during the financial crisis. While this should put downward pressure on risk assets, equities have subsequently recovered and achieved fresh highs, aided by comforting words from Fed Chair Jerome Powell, who restated the central bank’s intention to foster a “broad and inclusive” job resurgence while not raising rates too soon. The rhetoric on rising consumer prices, as well as other indicators that authorities believe a solid recovery means the end of vigorous policy support, will be scrutinized by markets. – Consumer confidence in the United States is at a 16-month high, and house price inflation is on the rise. 4/ ARE YOU READY FOR A SUMMER WASHOUT? As the Delta variation spreads over the world, the chances of another summer being canceled are increasing. The United Nations has issued a gloomy warning that international tourism arrivals will stall this year, resulting in $2.4 trillion in losses, and travel and tourism stocks have had a rough few days. According to Refinitiv statistics, a southern European travel share index of companies lost almost 500 million euros ($590 million) in market capitalization in the week ending July 1. But don’t put your beach towels and sunscreen away just yet. To promote tourism, the EU has established a digital COVID certificate system. If it is certain that vaccinated persons are protected, Germany, for example, may relax travel restrictions from countries where the Delta strain currently predominates. – According to a UN assessment, international tourism will not recover until 2023. 5/ THE BLUES HIT THE GREENS With only three months until the German elections, Europe’s most important political event this year, polls appear to suggest that the Greens are losing steam. The party is dealing with a Christmas bonus payments controversy and a regional election failure, and leader Annalena Baerbock is facing plagiarism claims and doubts about her CV. Following a brief boost in the polls after Baerbock was chosen as chancellor candidate, the Greens now have 20% of the vote, well behind Angela Merkel’s ruling CDU/CSU, which has 30%. The changing arithmetic of Germany’s coalition matters for future policies in Europe’s largest economy. A CDU/CSU-led coalition with the Greens appears to be the most likely option for now, with the pairing projected to deliver more stability than change. However, there is still some time left. – The head of the German Greens dismisses plagiarism claims as a blow to his credibility ($1 = 0.8456 euros). Tom Westbrook in Singapore, Saqib Ahmed in New York, Marc Jones, Saikat Chatterjee, and Karin Strohecker in London contributed reporting; Dhara Ranasinghe compiled the story; and John Stonestreet edited it./n
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