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Global Markets Overview: June 2021

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By David Hoile | June 29, 2021

Tracking recent asset price moves and our outlook

In this month’s Global Markets Overview :

Key Points for June

  • Headline inflation in the US rose to 5.0% year-over-year, with core CPI rising by 3.8% year-over-year.
  • Rising inflation is partly being driven by sectors which are experiencing a supply-demand mismatch due to supply-side bottlenecks as economies open further. For example, used cars have seen prices increase by c.30% year-over-year, partly due to a shortage of semiconductor supply, which has caused new car production to slow.
  • Our central outlook projects that the jump in inflation will be temporary and will fade over the next year. However, it is important to monitor the likelihood of, and portfolio risks from, sustained higher inflation.
  • Policy is underpinning a strong rebound in global spending on services.
  • A strong recovery in the services sector in the US and Europe is underway, reflecting both public health policy (the further opening of economies) and economic policy (high levels of government and central bank support). The services component of the Purchasing Managers’ Index (PMI) is a useful measure for the strength of spending on services. The latest global PMI reading has come in at 59.4 – a number above 50 implies spending is growing and 59.4 suggests a rapid expansion.
  • These point to rapid growth in services-related spending, supporting strong aggregate GDP growth over 2021/22.

To stay up-to-date and receive additional special feature reports from Willis Towers Watson on global capital markets, please contact David Hoile.

Author

Senior Director, Investments

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