We have had an uneventful start to the week as global equity markets wait for Friday’s (2 July 2021) US employment data.

After last week’s hawkish ‘dot plot’ surprise from the US central bank, we said markets were getting way ahead of themselves as it was far too early to conclude that the current economic reflation is over and that we will see significantly higher interest rates in the coming years.

Despite a number of economic data releases, global equity markets have effectively gone nowhere so far this week as everyone is waiting for the conclusion of this evening’s Fed monetary policy.

There has been no significant economic data releases so far this week, and given inflation continues to be the hot topic, all eyes are on the US CPI inflation reading which will be released later today.

The inflation outlook remains the big theme this week ahead of Friday’s US core PCE data release (the Fed’s preferred inflation measure).

Last week’s inflation theme remains front and centre of attention – and unfortunately, that has hurt global equity market sentiment.

The big miss in US employment last Friday, hasn’t stopped the markets obsessing about inflation (and as a result, higher US interest rates), especially given the shutdown of the largest US fuel pipeline due to a cyberattack has resulted in petrol shortages and higher petrol station prices.

The inflation theme has remained front and centre for global equity markets so far this week thanks to contradictory comments from Janet Yellen, the US Treasury Secretary and former Fed Chair.

There has been a multitude of announcements and meetings to keep us busy this week, but given all the talk about how inflation is building, the big one was the outcome of last night’s Fed monetary policy meeting and accompanying press conference.

Global equity markets have been on the back foot so far this week as coronavirus infections and deaths in India continue to rise.