At the beginning of the month the Fed announced a timid Tapering by selling all bonds and corporate debt ETFs. Both items represent $ 13.7 billion, a very small figure compared to the Fed’s balance sheet. However, it highlights the intentions of the North American Central Bank. Inflation in the United States continues to climb. The data known in June was + 5.0% year-on-year, exceeding expectations. The record of the underlying followed the same trend reached at + 3.80% year-on-year. Again, three items clearly distorted the data: second-hand cars, car rental as well as airline tickets and hotels. Despite the above, the US debt managed to reduce its IRR levels in June, being one of the surprises of the month. Some analysts suggest that the Fed would have difficulty raising rates since, under the current situation, such a rise would damage the economy.
In Europe, public debt also improved considerably, thus slowing the escalation in profitability that began several months ago. The ECB continued with a very accommodating speech for its Monetary Policy. Tapering was not mentioned while the institution left on the table to increase the rate of purchases of the Emergency Purchasing Program for the Pandemic. In addition, Lagarde places inflation in the Eurozone at 1.99% for 2021 and 1.51% for 2022. For its part, the Fed meeting filled investors with doubts. Powell expressly cited the
possibility of tapering if the economic evolution in the USA continued at the current rate. Furthermore, inflation forecast for 2021 rose markedly to 3.4% from 2.4% previously.
The dollar rose sharply after the Fed meeting. The US currency appreciated 3.0% against the EUR in June. This had a negative impact on most raw materials, thus ending the increases recorded in recent months. Finally, Biden was able to approve his infrastructure plan, although for a lower amount than the initial one.
The final figure will stand at $ 1.2 trillion.