Week ending 17th September 2021.

It was a bit of a messy week for global equity markets: after initially moving higher, equities fell towards the end of the week as inflation data (covered in our mid-week market update), coupled with strong US economic data increased the chances of the Fed turning hawkish at next week’s monetary policy meeting (Wednesday 22 September 2021).

Among the positive economic data was the Empire State Manufacturing Survey which came in at 34.3. Not only was this well above economists’ expectations of 17.9, but more importantly, the underlying details clearly show that the US economic recovery remains on track as both new orders and employment contributed to the positive reading.

US retail sales data also came in substantially higher than expectations, suggesting to us that the rapidly spreading Delta variant isn’t hurting household confidence.

It was a different story in the UK where retail sales came in below the major economist expectations. However, we don’t believe this should have been a surprise as the retail sales data doesn’t include spending on things such as eating out in a restaurant – and given the weather, coupled with the relaxation of restrictions and mask-wearing, we believe that this data reading simply reflects a change in people’s spending habits from goods, to services.

Looking ahead to the coming week, in addition to the Fed’s monetary policy meeting and accompanying press conference on Wednesday, the BoJ and BoE also hold monetary policy meetings.

Additionally, we have US housing data; PMI data for the US, UK, Eurozone and Japan; and Canadian elections.