Markets were relatively quiet this week, as largely positive economic news flow did little to move asset prices in one direction or the other. Equities advanced slightly on a New York Times report claiming that US President Biden will seek $6 trillion in US spending in the next fiscal year; the White House will unveil its full proposal later today.

Investment professionals have for many years employed the concept of an ‘investment clock’ to determine which asset classes perform best in the various stages of the global economic cycle and interest rate changes. While the hand is currently pointing to economic and equity market recovery, is the clock ticking for investors? Is the mounting concern over inflationary pressures and possible rate hikes justified?

Data released yesterday showed US consumer prices rising in May at the fastest pace seen since 2009,echoing much of the sentiment which appears to have been underlying market expectations over the last few weeks. Whilst the Federal Reserve insists this inflation is transitory to justify its inaction, the definition of “transitory” is open to interpretation. Driven by a vastly expanded money supply and a number of longer-term trends, it is perhaps more likely that inflation will remain high for some time.

The last months have taught us that market sentiment can hinge on the smallest miscue. A pause, redundant adverb or glance in the wrong direction can send the market into a frenzy. These days, Federal Reserve announcements are as much about stage management as they are hard economic policy and Wednesday’s meeting was no different.

Some stability returned to markets this week as central bank remarks which aimed to alleviate some of the tensions caused by last week’s Federal Reserve meeting seemed to have the desired effect. Signs that the Fed might be slowing down its bond buying programme or even beginning to discuss rate rises caused some volatility last week. Worries that faster inflation might speed up policy tightening seemed to fade following central bank remarks

The world’s leading economies have agreed a plan to ensure multinational companies pay a global minimum corporate tax rate of 15%. On Thursday the OECD announced the agreement between 130 different countries.