After what has been a solid month for equities and bond investors, month end flows have probably play their part in the price action overnight, US equities have lost momentum, UST have led a rise in core global bond yields and the USD is stronger. US and European inflation releases favoured the notion the Fed and ECB are done with their respective tightening cycles.
June 1, 2021
US Economic Update – May 2021
Q2 growth still looking strong; April inflation surprise.
Key highlights:
- April activity data have been mixed, but still point to very strong growth in Q2 GDP.
- There was a major upside surprise to inflation in April. While this largely reflects some temporary factors that should wane over coming months, how long current elevated price pressures persist is a major uncertainty.
- We still expect tapering of asset purchases to begin in Q1 2022, with the Fed signalling this towards the end of this year.
- We also expect the fed funds rate to remain unchanged through to end 2023, but note that this call is line ball, with a risk of rate hikes in 2023.
Find out more in NAB’s US Economic update May 2021