On Friday, the Dax was preparing to end the week hardly changed.
Inflation, and what the central banks do with it, dominated analyst reports last week.
Will America's Federal Reserve cut its bond purchases in the fourth quarter?
And is the European Central Bank, for its part, reducing the pace of purchases?
Christian Siedenbiedel
Editor in business.
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All of this was closely followed not only on the bond and currency markets, but also on the stock exchanges. The stock market seems to be more preoccupied with developments in America than in Europe. On Tuesday in particular, however, when an August inflation rate of 3 percent was published for the euro zone and several ECB council members speculated about a reduction in bond purchases, this also temporarily worried equity investors.
For the bond markets, David Zahn, head of European bonds at the Franklin Templeton fund company, described it this way: "Bund yields have risen due to several simultaneous events," he said. Inflation in the euro zone was higher than expected, but at the same time it was discussed that the ECB should begin to curb its bond purchases. "On top of that, the US Federal Reserve announced last week that its tapering, ie the throttling of its bond purchases, would begin this year," said Zahn. Investors would have to assume that this combination will put increased upward pressure on bond yields in Europe.
Commerzbank followed up on Friday with an analysis of how increased raw material prices and bottlenecks in production and transport are making individual goods such as furniture and cars more expensive. Some services would also become significantly more expensive after their prices were initially under pressure due to the lower demand in the pandemic - this includes restaurants and hotels in particular, but also, for example, hairdressers and craftsmen services. Nonetheless, Commerzbank comes to the conclusion that The current rise in inflation is only temporary - but it could be a harbinger of higher inflation in the future.
Bankhaus Metzler brought another possibility into play in a market report on Friday: Is oil slowing down inflation? The high inflation rates in America and Europe in the past few months were particularly driven by the rise in energy prices. Can this also weaken because the oil price is no longer rising that much?
Bankhaus Metzler refers to Opec, which on Wednesday announced higher oil production from October and, from Metzler's point of view, a forecast for demand in the next year that is perhaps too optimistic. "We are increasingly gaining the impression that the basis for soaring oil prices will no longer exist in the foreseeable future," writes the bank. After all, the oil price, which had risen and risen until July, has not been able to reach any new highs recently. At some point that could also affect inflation.
Jörg Krämer, Commerzbank's chief economist, also thinks this is plausible. He says: "Because, according to our forecast, the oil price should not continue to rise, the inflationary effect of energy will gradually diminish in the course of the coming year." The economist continues: "If we again expect an inflation rate of only 2 percent for the end of next year Then it is also because the rise in oil prices is coming to an end. ”In addition, there would be the end of the VAT effect and the material prices, which should normalize again after the pandemic subsides.