Market Update

Despite the fact that most major global equities ended the week with relatively little change, it was indeed a week marked by significant volatility.
Equity markets had been gradually moving past the shadow of the coronavirus outbreak, but the rapid spread of the Delta coronavirus variant has brought it back to the forefront, coinciding with recent comments from the Federal Reserve (Fed) about considering the tapering of monetary support.
However, we view this as a typical knee-jerk reaction to a new source of uncertainty. As we've emphasized before, equity markets tend to dislike periods of uncertainty but have the capacity to adapt to various circumstances. Therefore, we don't interpret this week's volatility as the start of a more ominous market correction.
Furthermore, while we acknowledge that the resurgence of coronavirus cases worldwide may lead to delays in economic reopenings and prolonged supply chain issues, there is a silver lining: it serves as a clear reminder to central bank policymakers of the risks associated with prematurely removing monetary support.
In fact, this reinforces our belief that interest rates are unlikely to rise in the near future. This sentiment is strengthened by the release of the minutes from the most recent Fed monetary policy meeting held on June 16, 2021, which indicated that while policymakers have become somewhat more hawkish, they also want to see additional economic progress, especially in terms of employment, before considering stimulus reduction.
As such, while the pace of economic recovery may moderate somewhat, we believe it is premature to assume that it has reached its peak.
Looking ahead to the upcoming week, there are several important economic data releases to monitor. Of particular interest are US and UK Consumer Price Index (CPI) and Producer Price Index (PPI) inflation figures, UK employment data, the Empire State manufacturing survey, industrial production data from the US, Eurozone, and China, retail sales figures from the US and China, the University of Michigan Consumer Sentiment Index, and China's second-quarter GDP data.