As 2021 comes to an end we can expect a bit more chop and some Portfolio adjustments as this year comes to a close. Get me take below on what remains for this year.
WEEKLY SOUND BITES:
After another volatile week, US Indexes ended lower for the week, as the prospect of central bank tightening and fears over the impact of the omicron variant of the coronavirus sparked considerable volatility. As longer-term interest rate expectations increased, growth stocks and the technology-heavy Nasdaq Index fared the worst while the typically defensive utilities, health care, and consumer staples sectors managed gains. Volatility to end the week was partly due to “triple witching,” or the expiration of three types of options and futures contracts on Friday. The Feds dominated sentiment for much of the week showed that most Fed officials now expect three quarter-point hikes in 2022 instead of two while announcing a faster tapering of its monthly asset purchases to $30B monthly…this will bring down to zero the Feds monthly asset purchases.
Major indexes dropped sharply early in the week when the PPI jumped 9.6% in November from a year earlier, the biggest increase since data were first collected in 2010. The data heightened speculation that Fed officials would signal more rate hikes in 2022.
Treasury yields decreased Friday as news on omicron caused risk sentiment to weaken, pushing the 10-year Treasury note yield below 1.40% for the first time in nearly two weeks.
Shares in Europe fell as governments tightened restrictions to curb the spread of the coronavirus and central banks became more hawkish. Yields rebounded on hawkish moves by major central banks and the European Central Bank’s (ECB) decision to scale back its emergency bond-buying program. Bond yields then came under pressure after ECB President Christine “Queen Bee” Lagarde indicated that an interest rate increase was “very unlikely” next year and on coronavirus concerns. And over in the U.K. the Bank of England (BoE) surprised the market with a short-term interest rate increase to 0.25%.
Following its December monetary policy meeting, the Bank of Japan (BoJ) maintained short-term interest rates at -0.1% and the target for 10-year JGBs at around 0%, as widely expected. The central bank extended its special program (launched in response to the coronavirus) to support financing, mainly of small and medium-sized firms, by six months until the end of September 2022. The BoJ remains among the world’s most dovish central banks. Japan’s exports rose 20.5% in November from last year’s level, driven by a recovery in auto shipments that suggested supply chain bottlenecks may be easing. Exports to China, the U.S., and the European Union all increased strongly.
The People’s Bank of China (PBOC) said it would raise the foreign exchange reserve requirement ratio, an action that took effect last week. Beijing pledged economic stability in 2022 at the government’s annual Central Economic Work Conference. In economic readings, data showed that China’s factory output grew faster than expected in November, but new pandemic curbs hit retail sales and fixed asset investment growth lagged forecasts.
Enjoy This Week’s Round-Up;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
