(Reuters] -The European Central Bank’s policy makers will have another chance to reflect on how stubborn inflation really is. However, U.S. corporate earnings are going to be dominated FAANGs.

China Evergrande Group may be in default, although it seems unlikely that the Chinese property developer will go bankrupt.

British markets are preparing for budget projections changes, and bitcoin is on the rebound.

1. FOLLOW THE HEAD? 

    Not for the first time – and likely not the last – the ECB has a delicate balancing act on its hands.

    At its meeting on Thursday, it will face pressure to acknowledge that inflation is proving stickier than anticipated. According to Bank of England, the U.S. Fed may begin tapering its operations within weeks. Comments from Bank of England suggest that there will soon be a rate rise in the UK. New Zealand, Norway and other countries have also tightened.

Is the ECB following suit? 

    It has good reasons, such as subdued wages, to stick with its message that long-term price https://www.reuters.com/world/europe/no-reason-ecb-increase-rates-by-end-next-year-villeroy-says-2021-10-19 pressures remain weak and surging energy prices could hurt consumer spending and growth. But markets don’t square with the ECB’s policy guidance https://www.reuters.com/world/europe/ecb-raise-rates-2024-risk-remains-earlier-hike-2021-10-22, and are pricing a strong chance of a rate hike by end-2022.

ECB Lane claims that the rates curve is not consistent with its guidance

2/ FAANG GAANG

Tech stocks and high global yields aren’t always a happy mix https://www.reuters.com/business/global-markets-wrapup-3-2021-10-22 and investors will have something to chew over as four out of the five FAANG stocks – Facebook (NASDAQ:), Amazon (NASDAQ:), Apple (NASDAQ:) and Google parent company Alphabet (NASDAQ:) – are expected to report earnings.

Markets have risen more than 100% since the breakneck growth of FAANG and its outsize weighting has been a major factor in driving them higher over the past decade. According to Refinitiv I/B/E/S data, all companies are expected to report their September quarter earnings, which will surpass last year.

Strong quarterly numbers could help technology and growth stocks broaden the lead https://www.reuters.com/business/developed-market-equities-us-tech-japan-gain-2022-fund-manager-says-2021-10-19 they have established over value-focussed peers in this year’s tug of war as markets find themselves caught between a powerful economic rebound and soaring commodity prices on one side, and rising Treasury yields and inflation on the other.

UPDATE 5-Global ‘Squid Game’ mania lifts Netflix (NASDAQ:) quarter

3 EVERGRANDE ENENCORE

It seemed almost curtains down for China Evergrande Group, the embattled property giant, whose debt woes have https://www.reuters.com/article/marketsNews/idUSL1N2RG1XB?il=0 rippled through global financial markets.

Evergrande provided the funds necessary to cover interest on an American dollar bond. This was days ahead of a due date that could have led to formal default. This is just one of the many payment deadlines that the group has to meet in the months and years ahead. There’s no doubt that it will need to pay off its debt eventually. Other companies also face pressure.

Meanwhile, an announcement by the property developer that it would prioritise growth of its nascent electric vehicles business over its troubled core real estate operations has helped lift shares in Evergrande and its EV unit https://www.reuters.com/business/evergrande-ev-unit-shares-set-jump-after-chairman-signals-business-shift-2021-10-25 on Monday.

The group also said it resumed work on more than 10 property https://www.reuters.com/business/chinas-evergrande-says-resumes-work-more-than-10-projects-2021-10-24 projects.

Evergrande’s debt drama will remain closely watched as a guide for how Beijing will deal with other major firms in financial trouble https://www.reuters.com/world/china/what-lies-beneath-hidden-debt-fears-feed-chinas-property-woes-2021-10-20. The company’s troubles have also caused a significant reassessment in the demand of premium investors for riskier Asian credit.

Some Evergrande bondholders received coupon payment for Sept 23 tranche -sources

UPDATE 2: Evergrande’s EV shares rise after the chairman signal business shift

4/ RISHI RED BOX

The UK Chancellor Rishi Sunak is expected to present on Wednesday his budget predictions. Expect them to report that borrowing in the next fiscal year of 2021/22 will be approximately 40 billion British Pounds ($55 billion), lower than March’s predictions due to stronger economic growth.

But Sunak – who has adopted a more hawkish fiscal stance than many of peers https://www.reuters.com/business/finance/uk-seeks-rein-covid-stimulus-despite-slowing-recovery-2021-10-20 – is facing a pretty bleak backdrop. The combination of higher inflation and lower growth coupled with labour market shortages and supply chain disruptions due to Brexit and COVID-19 is making investors and policy makers uneasy https://www.reuters.com/article/britain-budget-cbi/uk-employers-tell-johnson-to-get-serious-about-tax-and-investment-idUSL8N2RH54L.

The pound continues to struggle against rising bets of a Bank of England rate increase. However, some investors feel that policymakers might be wrong by tightening too quickly. This has made the British currency volatile relative to its major competitors.

UPDATE: Sunak approves budget, reducing borrowing by half in 2-UK

5/BITCOIN ROLERCOASTER

The rollercoaster ride of this year is now even more intense. The biggest cryptocurrency hit an all-time high of $67,016 on Wednesday, fuelled by bets the first U.S. bitcoin futures exchange traded https://www.reuters.com/technology/bitcoin-futures-highlight-some-pitfalls-new-etfs-2021-10-19 fund would pave the way for money to pour into digital assets.

Bitcoin’s most recent peak occurred six months after the last. Its journey between then and now was marked by volatile price swings, which were dominated by China’s cryptocurrency crackdown.

Crypto analysts reckon the dawn of U.S. ETFs – a dozen others are in the pipeline – will support prices https://www.reuters.com/technology/cathie-woods-ark-invest-throws-weight-behind-new-bitcoin-futures-etf-2021-10-14. Some argue that bitcoin is more important than the inflation hedge. Whatever the case, it is certain that bitcoin volatility will not be surpassed.

UPDATE 2Bitcoin sets record, one day after U.S. ETF debut