Saikat Chatterjee’s perspective on the future.

The International Monetary Fund, regardless of the prudent standards set by global organizations, is well-known for making cautious predictions. Investors need to be alerted when the Fund lowered its growth forecast for 2021 on Tuesday. It also stated that it is becoming more worried about inflationary pressures.

The markets are nervous ahead of September U.S. CPI’s release. This is the biggest data point of day. U.S. stock markets are down and most major interest rate curves remain steeply biased. The rising stagflation fear indicates that data risks are not asymetric. An unexpectedly high print, which is higher than what was predicted in a Reuters poll, could cause a greater market reaction than a slight miss.

In some ways, it feels like the market is trying to call central banks’ bluff on the “transitory inflation” mantra, with money markets in the developed world moving over the past week to aggressively price interest rate hikes

Indeed, according to Deutsche Bank’s latest monthly survey, for the first time since June, COVID is no longer perceived to be the biggest risk to the markets with the top spot taken by higher inflation and bond yields.

The latest Asian macro data were mixed. There was Chinese export growth that beat expectations and an unexpected fall in Japanese machine orders. Also, there was a drop in consumer confidence in Australia.

The global stock market is not far from May lows and the gauge of volatility in currency markets creeps toward 2021 highs. The recent increase in Treasury yields is now stalled and the dollar has fallen against major currencies.

Unofficially, Wednesday marks the start of U.S. corporate earnings seasons. JPMorgan is the first major bank reporting. The market has outperformed banks shares by an incredible margin this year. Investors will be interested in what the bank CEOs have to say about the outlook.

On Wednesday, key developments should give more direction to the markets:

U.S. Federal Reserve Minutes

August, Euro Area Industrial Production. The UK’s GDP recovers growth after July’s contraction.

Corner of central banks: BOE’s Cunliffe, ECB’s Visco

SAP Software, German Business Software Group, raised its full year outlook due to strong third-quarter results.

THG Ltd shares lost more than a third on Tuesday, just as THG Ltd presented to investors.

In the third quarter, sales of LVMH’s leather goods and fashion division grew strongly at French luxury company LVMH.

Here’s a picture of banks

https://fingfx.thomsonreuters.com/gfx/mkt/mypmnggobvr/banks.JPG