Author: Wayne Cole
A holiday in the United States did a fine trade, but that didn’t stop the Treasury’s future from slipping further and hitting a three-year high of $ 86.71 a barrel.
Of concern for the world’s second-largest economy, retail sales rose by only 1.7% year-on-year in December, down from a 3.7% rise.
Industrial production improved and the economy as a whole grew by 4.0% in the fourth quarter.
The Chinese central bank was also surprised by the reduction of some key lending rates by a large 10 basis points.
“The cut was larger than expected, suggesting that the authorities are more concerned about the economic weakness,” said Carlos Casanova, a senior Asian economist at the Union Bancaire Prive in Hong Kong.
“The latter (Omicron risks) will only begin to be fully priced in the combined January-February data, as the most severe blockages began in late December.”
Simplification seemed to be helped by China’s blue chips, which grew by 0.9%.
MSCI’s broadest Asia-Pacific stock index fell 0.3% outside of Japan and bounced 0.8% after losing 1.2% last week.
Nasdaq futures fell another 0.3%, while they lost 0.1%. EUROSTOXX 50 futures rose 0.4% and were flat.
The main feature of the market lately has been the turnover in stocks and away from growth, especially technology. The information technology sector, which accounts for almost 29% of the index, fell by 5.5% this year.
With valuations still high, profits should be strong enough to stop further losses. The S&P 500’s overall earnings are expected to rise 23.1% this season, according to Refinitiv IBES, and the technology sector expects a 15.6% increase.
Among the companies reported this week are Goldman Sachs (NYSE :), BofA, Morgan Stanley (NYSE 🙂 and Netflix (NASDAQ :).
Market talks by U.S. Federal Reserve officials this week will be waived before a policy meeting on Jan. 25-26, but there has been enough black commentary to see the market at almost full price in the first March rate hike and rates. 1.0% by the end of the year.
It was also rumored that the Fed will start reducing its balance sheet sooner than expected to break the excess liquidity in world markets.
Cash yields for the 10-year Treasury rose to a one-year high of 1.8% last week and rose to 1.86% in implicit future returns on Monday.
A Bank of Japan (BOJ) policy meeting this week will see a speech reviewing growth and inflation forecasts, while sources said Reuters officials were discussing when they could begin telegraphing an interest rate hike soon.
Although there is no movement this year, the financial markets may be underestimating its readiness to gradually expand its radical stimulus program.
That was one of the reasons the yen rose, falling 1.2% in the last week. On Monday, the dollar rebounded slightly to 114.45 yen, still well above the main support of the 112.52 chart. [FRX/]
The euro was lower by $ 1.1414, a rise in bond yields that helped it rise to 95,258 inches, and was far from a 10-week low of 94,626 on Friday.
“We continue to think that green jewelry will be strengthened again, as we expect strong Fed price pressures in the U.S. that the Fed will tighten more and more over the discount today,” argued Joseph Marlow, an economist at Capital Economics.
They see the Fed rates above 2.5%, while the market peaked at around 1.75-2.0%.
The risk of higher rates limited unprofitable gold to $ 1,816 an ounce, while industrial and energy resources benefited from sustained demand and limited supply.[GOL/]
Oil prices have been on the rise for four weeks in a row, and such demand is that physical oil barrels are changing hands with record highs. [O/R]
Brent added another 13 cents to $ 86.19 a barrel, up from $ 86.70 in 2021. The 2018 peak is $ 86.74, and a break would bring it to the height it last visited in 2014. They also put 35 cents at $ 84.17.