Danilo Maroni shows us the day ahead.

After months of deliberation about the temporary nature of higher inflation, and the potential monetary policy consequences thereof, the markets will soon find out what the impact of rising input costs on companies in the third quarter of 2021.

The reporting season begins this week. It will focus on commodity price increases, labor shortages and supply chain bottlenecks. This story will replace the overall recovery narrative from the past two quarters. However, with global stocks falling as high as 6% from their record-setting peak last month, it is unclear if the margin squeeze has been priced in.

    Asia started Monday on the upside but European and U.S. equity futures suggest some caution, possibly as oil prices extended their multi-week gains, pushing to new three-year highs.

    Still, investors may be coming to terms with a more moderate economic growth pace. This week, earnings are reported by 19 firms. The big banks report the first. Refinitiv IBES predicts that profit growth will be 30% for this quarter. That’s down from 96% during the three-month prior.

After Friday’s agreement by 136 countries to implement a minimum 15% tax rate for big companies, tax arbitrage may be more difficult for businesses in the future.

    Meanwhile, hawkish central bank noise continues. Michael Saunders, Bank of England policymaker, advised households that they should be prepared for “significantly sooner” interest rate increases. After Andrew Bailey, BoE Governor, stated that above-target inflation was alarming and needed to be controlled, he spoke.

Polish rate setting agent said the surprise rate increase last week was the first step towards normalising monetary policies.

Graphic: Morning bid: https://fingfx.thomsonreuters.com/gfx/mkt/xmvjolojapr/Corporate%20profit%20growth.PNG

Markets should be more informed by key developments on Monday

* Japan households expect inflation to pick up – BOJ survey

* Goldman cuts forecast for U.S. economic growth in 2021 and 2022

*Chinese developer Modern Land asks to delay bond repayment – WSJ

* Yellen confident U.S. Congress will pass minimum global corporate tax

* ECB Board Member Frank Elderson, Philip Lane

* World Bank/IMF meetings

* Fed speakers: Chicago Fed President Charles Evans