Calendar Week 46 – 2021

Several talking heads from Central Banks could give us some volatility this week. And there is a number of key data points to focus on as inflation continue to heats up. For some, wage growth is not going with inflation – which is concerning for those in the lower end of economic income. USA is getting wage growth as well as hot inflation, so the market has now priced in a full 1% rate rise by July 2022 and a further 1.5% by this time next year, with Dec 2022 futures at 2.53%.

For those like Australian banks, who borrow money from the USA to fund their loan book, this is already getting to be an expensive enterprise as margins shrink. The Aussie banks will either have to source cheaper funding elsewhere or start raising their mortgage rates. Guess which path they will take?

If you have a variable mortgage in Australia it is about to get more expensive for you – which is great as wages continue to stagnate and inflation rises so the cost of fuel, food and energy also ramp up.

Today we have Japanese GDP and Chinese Industrial Production, followed by tomorrow’s UK employment data and USA retail sales. Wednesday brings UK and Canadian inflation figures as the talking heads peak throughout Thursday. Friday has Japanese Inflation and UK retail sales. Something every day for the market to focus on and give us some volatility to trade.