June Global Macro Monthly - The European green deal

Key points

• US developments dominate international markets. The Fed adopted a more hawkish tone at its latest policy meeting. Meanwhile White House spending proposals appear increasingly challenging to deliver.
• Receding virus concerns underpin a more upbeat Eurozone. The European Central Bank remains supportive for now with Pandemic Emergency Purchase Programme purchases continuing to remain elevated.
• China’s growth rates soften, although some domestic consumer recovery points to more structure. Yet credit growth deceleration may make the People Bank of China feel uneasy over the pace of deceleration.
• US Treasury yields have been volatile, they remain broadly <1.50%, but real yields have gained at breakeven inflation expense.
• The dollar has also gained significantly since the Federal Reserve meeting, up around 2% against a basket of currencies.