Markets brace for US inflation data and European Central Bank meeting – business live


Rolling coverage of the latest economic and financial news

7.40am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It’s a big day for the markets, with the latest US inflation figures and the European Central Bank releasing its latest monetary policy decision, and giving its view on the eurozone recovery.

Welcome to the day with the most eagerly anticipated data point in recent memory.

I suspect that neither side will admit defeat if the number goes against them as it’s likely too early to see a definitive trend. There will still be large anomalies all over the place. Nevertheless, so far I would say that the inflationists have overwhelmingly won round one of this bout but that the Fed put up a confident defence in round 2 to draw level. Round 3 starts today.

Hot inflation became scorching in May and is expected to hit a 28-year high

US Core CPI spiked to 3.0% you last month, and consensus is for a 3.5% yoy reading Thursday. But the debate about transitory or not will not be settled any time soon. The debate will go on.

And twitter is not a bad place to follow how the views are evolving.

There are still major uncertainties. One is the threat of the new Covid-19 strains and resulting economic impacts. Also, financial conditions have been tighter since the March meeting, and the ECB does not want to give a hawkish signal that could further tighten them. Additionally, although service sectors are reopening, the ECB would like to confirm that an activity rebound recreates jobs.

Finally, the pace of a recovery in inflation rates and the ability of the ECB to support a gradual and sustained rise in inflation rates is uncertain.

Futures largely unchanged this morning, while Treasuries find slight demand, and G10 FX treads water in familiar ranges.

Looking ahead, a busy day awaits, including the ECB decision, US CPI & US jobless claims.

European Opening Calls:#FTSE 7101 +0.28%#DAX 15606 +0.16%#CAC 6577 +0.20%#AEX 723 +0.08%#MIB 25746 +0.02%#IBEX 9208 +0.57%#OMX 2276 +0.15%#STOXX 4105 +0.20%#IGOpeningCall

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