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Author: Noreen Burke
Investing.com – COVID-19 is back on the investor agenda amid fears that the new Omicron variant could halt a global economic recovery from a nearly two-year pandemic. The new tensions may raise doubts about how quickly the Federal Reserve can move to release stimuli to counter the spiral of inflation. Against this background, Friday’s U.S. jobs report and Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen will be carefully watched on Tuesday. Oil prices will rise sharply ahead of Thursday’s OPEC + meeting. Meanwhile, eurozone inflation data will be in focus ahead of the December European Central Bank meeting. Here’s what you need to know to start the week.
- A new pandemic wave?
The three major Wall Street indices fell on Friday as they reopened after Thursday’s Thanksgiving holiday saw the impact of sales on shares related to energy, finance and travel,.
Although little is still known about the new variant that was first detected in South Africa, scientists say the vaccine is resistant and has a large number of mutations that could be easier than the Delta variant.
“Markets were celebrating the end of the pandemic. Slam. It’s not over,” David Koto, president and chief investment officer of Cumberland Advisors, told Reuters. “All the policy issues, that is, monetary policy, business trajectories, GDP growth calculations, the recovery of leisure and hospitality, the list goes on.”
Earlier on Friday, investors appeared pleased with the strength of the economic recovery, amid widespread vaccine availability and advances in treatments, despite fears that inflation is steadily rising.
- Jobs report
A strong November labor report may highlight the Fed’s case of accelerating its $ 120 billion monthly promotion program at its next meeting in mid-December. But a new wave of pandemics could call those plans into question.
Concerns about the inflation spiral, along with signs of a accelerating economic recovery, prompted investors to push prices down faster and raise interest rates earlier.
A report on non-farm payrolls on Friday will show that the economy has added jobs, lowering the unemployment rate slightly.
Next week’s economic calendars are indices from the Institute of Supply Management and, and data from the Fed.
- Testimony of Powell and Yell
The president of the faith, newly appointed by President Joe Biden for a second term, on the CARES Act, the central bank is due to testify about the pandemic recovery program on Tuesday before the Senate Banking Committee in Washington. Finance Secretary Janet Yellen is also due to testify.
A similar hearing will be held before the House Finance Committee on Wednesday.
Investors will be looking for new information on economic recovery forecasts amid renewed pandemic uncertainty.
- Oil demand forecast
prices fell $ 10 a barrel on Friday, the biggest one-day decline since April 2020, as news of the new Omicron variant saw the country in a hurry to reduce travel as supply oversupply could increase in the first quarter.
The Organization of the Petroleum Exporting Countries and its allies (OPEC +) will meet on Thursday, following a decision last week by the US and other governments to release oil from strategic reserves, with the aim of lowering the price of petrol.
For its part, OPEC + has maintained its monthly production of 400,000 barrels (bpd) since August, despite calls to increase production to lower oil prices.
“The initial assessment of OPEC (coordinated) release and the sudden emergence of a new variant of coronavirus raises serious concerns about the balance of economic growth and oil in the coming months,” PVM analyst Tamas Varga told Reuters.
- Eurozone inflation
The eurozone will release flash data for November on Tuesday. Consumer price inflation rose by 4.1% in October to 13%, and is expected to exceed the ECB’s target of 2% next year. ,, and KPI data will be released on Monday and Tuesday.
As inflation rises, the ECB is making increasing calls to tighten monetary policy, but as Europe struggles with the virus and learns of a new strain policy, pigeons have new ammunition to return to those who demand an early end to the stimulus.
The ECB is expected to raise its inflation forecast for 2022 at its meeting next December. Investors also expect the ECB to announce that the pandemic-era asset purchase program will end in March, and to offset the stimulus reduction while the current bond-buying program intensifies.
–Reuters contributed to this report
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