Weekly Wrap-Up

Last Week In Markets: Jun 07 - Jun 11 2021

Fisher Investments recaps the biggest, political and economic news from last week, including US and Chinese inflation data, UK industrial production readings and Japanese Q1 GDP estimates.

In the US, data were light. May core consumer prices (excluding food and energy) rose 0.7% m/m and 3.8% y/y, both higher than consensus estimates. Pundits focused primarily on May’s 5.0% y/y headline inflation figure—the biggest uptick in 13 years. However, Ken recently discussed these inflation concerns in his 6/10/2021 RealClearMarkets article: “Why Inflationphobia Is Way Over Inflated.” In the article, Ken explains how year-over-year inflation measurements are being boosted by comparisons with figures from last year’s COVID-19 lockdowns—when prices plummeted due to collapsing demand for goods and services. This base effect is causing recent inflation readings to increase dramatically, but this effect is likely to dwindle over the summer. For more, please see our 06/11/2021 MarketMinder commentary “Fast Inflation Still Looks Fleeting to Us.”

In the UK, April industrial and manufacturing production rose 27.5% y/y and 39.7% y/y, respectively—with both figures skewed upwards by comparisons to April 2020’s low levels. On a month-over-month basis, April industrial and manufacturing production fell 1.3% and 0.3%, respectively—missing expectations. April exports and imports increased 2.5% m/m and 0.4% m/m. In the eurozone, the third estimate of Q1 2021 GDP was revised upward to -0.3% q/q from the previous reading of -0.6% q/q. The European Central Bank (ECB) left monetary policy unchanged.

In Japan, the second estimate of Q1 2021 GDP was revised upward to -1.0% q/q from the previous reading of -1.3% q/q, better than expected. Preliminary May money supply (M2) rose 7.9% y/y, less than expected, while May bank lending increased 2.9% y/y. In China, May consumer prices rose 1.3% y/y, below forecasts, but fell 0.2% m/m, less than anticipated. May exports and imports rose 27.9% y/y and 51.1% y/y, respectively—both missing expectations. May money supply (M2) rose 8.3% y/y, surpassing estimates.

The Week Ahead:

The US and China release May industrial production and retail sales figures. The eurozone and Japan report April industrial production and May consumer prices. The Conference Board announces the US May Leading Economic Index reading. The UK posts April unemployment data and May retail sales and consumer prices. China reports May unemployment numbers while Japan releases May trade data. The Federal Reserve and Bank of Japan meet to set their respective monetary policies.