IAIC Market Update - September 20, 2021

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• Losses in equities for the second consecutive week were not as severe as the previous week. The year-over-year (1Yr) advances remain in the 24 – 38% range, and so far, year-to-date (YTD) equities have gained between 13 -18%. Inflation fears and resultant monetary policy responses have heavily influenced markets lately.
• Inflation in Canada surged to its highest level since 2003 as prices in August rose 4.1% compared with a year earlier.  Comparing July 2020 to July 2021 the inflation rate was 3.7%. August becomes the fifth consecutive month where inflation exceeded the Bank of Canada’s target annualized year-over-year rate of 2%.
• In the U.S. year-over-year inflation rate fell slightly from 5.4% in July to 5.3% in August. The month-to-month inflation rate also declined. Prices rose 0.3% in August compared to July, down from 0.5% for the period of June to July. This very slight moderation, and the lower core rate of inflation at 4.0% for August versus 4.5% for July, supports the Federal Reserve’s position to maintain current programs. 
  
  

What’s ahead for this week?

• In Canada, retail sales for July and the new housing price index for August will be released. The Federal government has tentatively scheduled a release of July’s budget balance. A summary of party stances on election issues can be found here. 
• In the U.S., housing starts, building permits, existing home sales for August will be announced. The Chair of the Federal Reserve, Jerome Powell, will speak following the Federal Open Market Committee’s announcement of monetary policy and an update to economic projections.
• Globally, capital markets are closed at the beginning of the week in Japan and China. Eurozone consumer confidence, manufacturing and service Purchasing Managers Indices (PMI) will be released. The Bank of England will announce its monetary policy, and the European Central Bank released its economic projections.