Economists predict that consumer inflation in the US will show an upward trend in tomorrow’s December report, which is set to be released on Wednesday, January 12. Concurrently, the Federal Reserve is intensifying its hawkish stance as markets brace for potential interest rate hikes later this year.
* US Covid-19 cases soar to 1.35 million in a single day, marking a new record
* Pfizer’s omicron vaccine is expected to be ready in March, according to the CEO
* Fed Chair Powell commits to tackling inflation
* Small business owners cite inflation as their biggest challenge since 1981, report shows
* Supply of government bonds is projected to increase in 2022
* North Korea reportedly launches its second test missile in six days, says South Korea
* Bank stocks (KBE) are on the rise as expectations for higher interest rates grow:
A negative trend affected most of the major asset classes in trading last week (up to Friday, January 7), based on a series of proxy ETFs. The exception to this trend was commodities, which saw a rally over the past week.
* Russia raises concerns about misunderstandings related to Ukraine ahead of talks with the US
* Goldman Sachs forecasts four interest rate hikes in 2022
* Key events this week include inflation data, interest rates, and Fed testimonies in Congress
* The IMF advises emerging-market countries to brace for US rate hikes
* Rising interest rates are boosting bank stock shares
* The German 10-year yield is expected to rise above zero for the first time in three years
* US payrolls increased less than expected in December, although the labor market approaches maximum employment
* The US 10-year Treasury yield starts the week at its highest level in nearly two years:
James A. Fok
Summary via publisher (Wiley)
As tensions between China and the US rise, the financial markets remain on edge, foreshadowing a potential confrontation between the world’s two largest economies. An often-overlooked aspect is how financial markets have influenced and intensified this conflict. In “Financial Cold War: A View of Sino-US Relations from the Financial Markets,” expert James Fok delves into the intricate relationship between market structure and geopolitical finance, highlighting how imbalances in global financial markets contribute to friction between the two nations.
On Thursday, January 6, the US 10-year Treasury yield reached a nine-month high, potentially setting the stage for a new pandemic peak in the coming days. If this occurs, it could indicate a likelihood that the benchmark rate will surpass pre-pandemic levels seen in early 2020, when the 10-year rate fluctuated within the 2-3% range.
* Markets are considering the potential for three-pronged policy tightening by the Fed
* The US 10-year Treasury yield briefly exceeded 1.75% on Thursday, a pandemic peak
* Russia is expanding its influence in Kazakhstan amid political unrest
* Eurozone inflation rose to 5% in December, achieving a new high
* US jobless claims increased last week but remain near historic lows
* US factory orders continued to rise for the seventh consecutive month in November
* Growth in the US services sector saw a sharp slowdown in December, according to the ISM survey data:
Investing inevitably involves forecasting, which can be seen as a necessary yet challenging endeavor. Every investment entails making assumptions about possible future events; if you don’t anticipate a return, you likely wouldn’t execute that trade. The challenges arise when delving deeper into forecasting methods, timeline, and specifics. However, the fundamental reality is that predicting risk tends to be more feasible than forecasting returns. While there are exceptions, even slight advantages in risk assessment can be beneficial.
* The Fed’s minutes indicate a possible rate hike in March
* Rising bond yields are impacting technology stocks
* Russia deploys paratroopers to Kazakhstan amid unrest
* North Korea claims to have successfully tested a hypersonic missile
* China’s business activities in December show growth at the fastest rate since July
* The US economy slowed in December but maintained a strong outlook
* Company payrolls in the US rose significantly in December, as reported by ADP:
The risk-adjusted performance of the Global Market Index soared through the end of 2021, as indicated by the trailing 3-year Sharpe ratio, which measures returns adjusted for volatility. After showing signs of weakening in November due to widespread selling, GMI rebounded strongly in December, enhancing the risk-adjusted results. The GMI is an unmanaged portfolio that includes all major asset classes (excluding cash).
