Hey Folks, I hope you all had a good holiday season with family and friends. We are now kicking off the 2022 financial markets and I see many surprises as well as more opportunities coming our way. Get me take in this week’s Round-Up.
WEEKLY SOUND BITES:
After another choppy week, US Indexes backed away from record highs at the start of the week as longer-term bond yields increased while expectations for higher interest rates took a toll on growth stocks and the tech-heavy Nasdaq.
Sentiment took a notable turn for the worse last Wed following the release of minutes from the Fed’s mid-December policy meeting. They revealed policymakers discussed faster and more aggressive rate hikes, with the first quarter-point hike in the official short-term rate coming as soon March. Officials also discussed taking steps to reduce the Fed’s balance sheet soon after liftoff. Selling a portion of the Fed’s USD 8.8 trillion in Treasuries and agency mortgage-backed securities would put upward pressure on long-term rates as well. Economic data released showed the ISM of both manufacturing and service sector activity missing consensus expectations but still above 50 which indicates expansion. And finally, the monthly payrolls report showed employers added only 199,000 jobs in December, roughly half of consensus expectations with average weekly hours falling a bit. The household survey, on the other hand, showed that the unemployment rate fell to 3.9%, lower than the 4.2% expected and near levels seen just before the pandemic.
U.S. Treasury yields moved decisively higher. The yield on the benchmark 10-year U.S. Treasury note touched 1.80%, its highest level since the onset of the pandemic. As investors digested the hawkish tone of the Fed’s meeting notes, and spreads between investment grade Corp. bonds and US Treasuries drifted wider in response.
While Europe posted record levels of coronavirus infections inflation in the eurozone accelerated to a record level in December, driven by a surge in energy and food costs. Consumer prices rose 5% year over year—an acceleration from the 4.9% inflation rate registered in November. The resurgent coronavirus hit the eurozone service sector and dampened business activity in December, a survey showed. IHS Markit’s Composite Purchasing Managers’ Index (PMI) fell to 53.3 from 55.4 in November.
In Japan, concerns about more aggressive monetary policy tightening by the U.S. Federal Reserve weighed on technology and other growth stocks. Japan’s manufacturing and services sectors were buoyed by signs of a gradual recovery from the coronavirus pandemic in December, yet the PMI feel to 54.3 in Dec from 54.5 in Nov.
And over in China, in economic readings, the Caixin Manufacturing Purchasing Managers’ Index, a private survey of nationwide manufacturing conditions, rose to a higher-than-expected 50.9 in December, up from 49.9 in November. China’s cash-strapped property developers, which are grappling with an unprecedented liquidity squeeze due to a housing slump and high debt levels, continued to show weakness.
Enjoy this week’s Round-Up;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
