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Investment Institute
Monthly Market Update

July global Macro Monthly - Clouds darken Summer re-opening

  • 22 July 2021 (10 min read)

Key points

  • COVID-19 again haunts markets – the delta strain gains.
  • A large re-opening recovery is underway. Yet virus re-emergence and supply-chain constraints are taking the shine off the pace of rebound.
  • Inflation is rising synchronously, driven by base effects, commodities and bottlenecks. Mostly expectations remain well anchored suggesting a transitory rise.
  • Some developed markets’ central banks are reducing asset purchases; the Federal Reserve remains “a ways” from such an announcement.
  • Technicals and positioning account for lower yields, although recent dips suggest risk-off delta fears.
  • Credit and equity remain well supported, although value-growth rotation in equity has reversed on lower yields. We prefer euro credit spreads to US.
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