CM – Look at the US economy rebound as the Fed stays on track

News of the accelerated recovery in the US economy could peak in the coming week. The data should show that production will approach pre-pandemic levels once the Federal Reserve makes its third policy decision of the year.

The gross domestic product is likely to have increased by 6.9% on an annual basis from January to March, after having been more moderate at 4.3% in the previous quarter. Other reports may show stronger orders for durable goods, a recovery in consumer confidence, and robust personal spending.

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A new tax break, rising Covid-19 vaccination rates and fewer pandemic-related restrictions are creating a greater tailwind for economic activity, which is expected to intensify further through 2022.

Fed Chairman Jerome Powell and his policymakers accept optimistic data. He has prepared investors not to fear any surprises from the central bank’s two-day meeting, which ends Wednesday, when officials are expected to keep rates near zero and not signal a change in their monthly bond buying pace of $ 120 billion .

Powell, who will hold a press conference following the decision, has offset optimism by warning that the economy of Covid-19 remains at risk worldwide. Officials in March signaled they expect rates to hold steady through 2023.

What Bloomberg Economics says:
BE expects the Fed policy statement recognizes continued acceleration in the economic recovery, but communications – including the post-meeting press conference – will be far from providing further guidance on conditions that are likely to reduce QE would justify. a????

In other countries, central bankers in Japan, Sweden and Colombia are among the numerous monetary authorities that hold meetings. The GDP data for the euro area is intended to show how the economy performed in the first quarter with renewed lockdowns in the region.

Asia
The Bank of Japan is expected to boost some of its growth forecasts and possibly lower its price view for the current year when it updates its economic forecast on Tuesday. The BOJ is widely viewed as a Pat following its policy changes last month.

The GDP figures for South Korea, also released on Tuesday, will be closely watched to see if the economy maintains the recovery momentum with the help of strengthening world trade. Japan’s jobs, retail sales, and production numbers will provide some final clues as to how the economy performed in the first quarter in the state of emergency, which is expected to be reintroduced in some cities next week.

Consumer price inflation in Australia is likely to remain subdued in the first quarter, as data from Wednesday will show. Investors will closely examine China’s April PMI reports on Friday to see if the strong economic momentum in the first quarter spills into the second quarter.

Europe, Middle East, Africa
Confirmation of the euro area’s final quarter of contraction during an excruciatingly long pandemic crisis is likely to arrive on Friday amid a flurry of GDP releases for the first three months of the year from across the continent.

During a four-hour frenzy, the region’s largest economies will report all output data along with the total for the currency area is only now making serious progress in immunizing citizens.

The European Central Bank confirmed last week that the economy will turn a corner in the current quarter. An outlook that policymakers could expand with several appearances in the coming days. Their meeting on Thursday had predicted what kind of a difficult discussion in June officials expected to start slowing their emergency bond purchases.
In other European countries, the Riksbank is expected to leave interest rates and its asset purchase program unchanged on Tuesday, which puts investor focus on its forecast statement for clues as to how quickly policy will be tightened could. Hungarian policymakers are likely to extend their wait-and-see position on interest rates.

Further away in the region, the central bank of Botswana is likely to keep its policy rate at a record low on Thursday even if inflation picks up, while Egyptian policymakers are expected to stay on hold on the same day despite space requirements.

The Turkish central bank governor will address investors in his inflation report on the same day. Markets will be looking for signs that he is ready to risk the wrath of President Recep Tayyip Erdogan, an opponent of higher borrowing costs, by raising interest rates after inflation hit 16.2% in March.

Latin America
Reports on Monday should show that Brazil’s current account gap narrowed in March, while FDI slowed from February’s 19-month high.

In monetary policy during the Covid era, the Brazilian central bank is staring at some uncomfortably warm inflation numbers. Mid-month readings and Tuesday and Thursday wholesale readings could cement bets that a short, sharp, front-loaded tightening cycle is pending. Data on hiring, unemployment, lending, government data, and budget balances round out the week.

Check out Mexico’s GDP production report released on Friday to show that Latin America’s second largest economy lost some momentum in the first quarter, despite being on its way to a strong end by 2021.

Chile’s month-end data deluge includes unemployment, retail sales, manufacturing and copper production. Chile is the world’s largest producer of the metal.

Although Colombia’s recovery stalled at the beginning of the year and inflation is testing the lows of the last 1950s, the likelihood is that the central bank will keep its key rate at 1.75% on Friday.

© 2021 Bloomberg L.P.

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