Global Markets Overview: July 2021

In this month’s Global Markets Overview:

Key Points for July

• Central banks in the major economies adjusted their policy guidance
• The Federal Reserve tightened its guidance for monetary policy slightly, at its June meeting, and now expects to raise interest rates by 0.5% in 2023 – previously no changes were expected. This small shift to tightening contributed to a decline in bond yields, as “squeezes” on short positions, the anchoring effect on inflation expectations, and fears of “peak growth” all offset any upward reassessment of the path of policy rates in the future.
• We note that, at the margin, the policy stance in the Eurozone and in China eased slightly over the month, which may also have contributed to moves in global bond yields.
• High frequency indicators remain suggestive of strong growth, despite some datapoints suggesting slowing
• “Peak growth” concerns have been fuelled over the past month. In the US, the closely watched ISM Non-Manufacturing survey fell over the month and disappointed expectations, fuelling concern US growth may be slowing.
• Our observation is that these surveys are volatile, other similar surveys changed by less, and the levels of these surveys remain consistent with a continuation of the rapid service-led expansion.

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Author

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David Hoile

Global Head of Asset Research at WTW

David is the Global Head of Asset Research at WTW, responsible for economic and capital market research. He also is a member of the Investment Assumptions Committee, who help guide investment policy globally.

email Email phone +44 20 7170 2144

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