US activity figures reinforce inflation expectations

US retail sales posted a strong rebound in January while industrial activity remained solid. This can only reinforce doubts about the relevance of a recovery plan as massive as the one the White House wants to put to the vote. This can only fuel inflation expectations as well. The spread between inflation expectations in the US and in the euro area is reaching record-high levels (see the Graph of the Day), which contributes to support the USD against the euro even if the Fed minutes showed there is no change of policy in sight. The EUR/USD plunged yesterday and is now trading below 1.2050.

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July 20, 2021


Falling inflation expectations, combined with collapsing equities globally, likely triggered a sell-off in crude and refined products futures. ICE Brent prompt contracts for September delivery went…
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