Week in a Glance: Infrastructure Plan, US Inflation & Britain

Markets have seen a clear boost in sentiment last week. This was supported by almost daily updates of historical highs for major US stock indices. Such a positive attitude can only be explained by the news that the Senate voted in favor of the Biden infrastructure plan bill. Considering the scale of the planned costs, the growth of the stock market seems quite natural. If not for a number of "but".

Let's start with the fact that it has not yet been finally adopted: we are waiting for the House of Representatives. In addition, buyers have enough reasons to worry. Inflation data from the US, released last week, showed that inflationary processes are not even going to fade. Consumer inflation in annual terms is all at its maximum levels for more than 10 years. Well, industrial inflation is breaking all records. At the same time, we recall that the labor market is in good shape judging by the NFP numbers, the number of open vacancies (more than 10 million) and statistics on jobless claims.

Considering that the rate of inflation growth is several times higher than the Fed's target, it is not surprising that after such data everyone looked towards the Central Bank. A number of heads of the Federal Reserve Bank unanimously announced that it was time to move on to curtailing the quantitative easing program and even announced the date - October.

And this we have not yet remembered about the pandemic, which does not even think to subside. After the Olympics, Japan received not only the maximum number of infections in the entire pandemic, but also admitted that the situation had become out of control.

Meanwhile, the reporting season is coming to an end and it is not at all clear where the markets will draw positive from this week. In general, taking into account the current circumstances and current prices, selling on the US stock market seems to us the only logical trading option.

At the same time, purchases of the dollar do not lose their relevance, as well as sales of oil. Last week, the IEA published a rather gloomy vision of the future oil market, according to which, at the start of 2022, the oil market risks slipping from a deficit into a surplus. With all the implications for oil prices.

The coming week will not be rich in significant events, but it will be full of all sorts of macroeconomic statistics. Starting with retail sales in the US and Great Britain, ending with inflation data from the Channels and the same Britain.