Data from ADP, Inflation and the Bank of England

6 May 2021

The main event of yesterday was the US employment data from ADP. Since the US economy is now recovering by leaps and bounds, everyone is waiting for new records. In this regard, yesterday's data came out relatively ambiguous. That is, the figure of 742K is simply an excellent result, the best since September 2020, and also 50% higher than the previous one. But, on the other hand, the average forecast of analysts was around 800K. So there is also reason for disappointment. Well, by and large, these data only added intrigue to Friday's official statistics. So,, we are waiting for the NFP numbers.

Commodity markets continue to break records and one of the basic indicators of the market as a whole, the Bloomberg Commodity Index, approached the highest values ​​since the commodity super cycle. The largest increase in prices was demonstrated by food raw materials such as soybeans and corn (40% +), as well as energy raw materials - gasoline and oil (about 40%). The outsiders are gold and orange juice.

A natural consequence of this will be an increase in production prices, and consumer prices will rise no less naturally after them. That is, inflation will transform from a hypothetical threat into a material threat in the foreseeable future. Actually, this is what Yellen tried to attract the attention of the markets to on Tuesday.

The main event of the day will be the announcement of the Bank of England meeting results. In the context of growing fears about inflation, each meeting of the leading central banks will acquire more and more importance. Because sooner or later it will be necessary to tighten monetary policy. We wonder who can’t stand it first. The most obvious candidates (based on the pandemic situation and, accordingly, the timing and speed of economic recovery) are the Fed and the Bank of England. That is why it will be very interesting to hear the comments of the Central Bank today.