US Session (12/10/2021)
In-line inflation data fueled betting that the Federal Reserve would not have to hasten plans to tighten monetary policy, sending US markets to record highs today.
The S&P 500 climbed 1% and the Nasdaq 100 gained 1.1% as the headline rate rose to 6.8%, the highest since 1982, as forecast. Meanwhile, the yield on the 10-year Treasury dipped to 1.49% as traders cut bets on the Fed's tightening pace.
After Fed's Powell stated the central bank might explore withdrawing stimulus at a faster pace, investors were looking forward to the inflation data and a meeting of the Federal Reserve next week for signals on the pace of tapering and interest rate increases.
The report comes as markets grapple with the threat of the Omicron virus. As virus cases and hospital admissions rise, the US appears to be on the verge of a holiday crisis. Similarly, London firms have told tens of thousands of workers to work from home.
Nonetheless, consumer morale in the US has been rising, with one indicator indicating an improvement in confidence from a decade-low in November. Gold rose while the dollar fell.
Separately, the chairman of China Evergrande Group, Hui Ka Yan, was forced to sell pledged shares in the company, according to disclosures made a day after the developer was officially declared a defaulter for the first time.
Asia Session (12/12/2021)
Asian equities and US share futures climbed as investors wagered that the global economic recovery will withstand the omicron variant as well as tougher central bank policies to combat rising inflation.
The Asia-pacific index of MSCI rose for the fourth session in a row, while the S&P 500, Nasdaq 100, and European futures also advanced. US stocks finished at an all-time high on Friday, following an inflation report that was strong but in line with forecasts.
The Federal Reserve is anticipated to accelerate the withdrawal of stimulus on Wednesday, perhaps opening the door to earlier interest-rate hikes in 2022 if price pressures remain near a four-decade high. Treasury yields in the US increased slightly, with the 10-year bond yielding around 1.5%.
Meanwhile, the pound fell as UK's Prime Minister Johnson warned of a "tidal wave" of infections caused by the omicron variant. The dollar remained stable. China set its daily reference rate at a lower-than-expected level, indicating that the central bank is willing to go further to halt the country's currency's persistent surge.
Europe Session (12/10/2021)
Traders awaited crucial inflation data and assessed the economic threat of the omicron strain as US futures gained on Friday.
After benchmarks ended a three-day rally, futures rose. The Stoxx 600 index in Europe declined. The dollar, treasury yields, and oil prices all went up.
After chairman Jerome Powell stated the central bank might explore withdrawing assistance at a faster pace, investors are looking to the inflation data and a meeting of the Federal Reserve next week for signals on the pace of tapering and interest rate rises. The consumer price index for November may indicate the greatest inflation rate since 1982.
Meanwhile, the United States appears to be on the verge of a holiday disaster, as virus cases and hospital admissions rise, while in the UK, thousands of London-based companies are being told to work from home. As the pandemic continues to decimate long-haul travel markets, Hong Kong is prepared to strengthen quarantine laws, and Heathrow Airport indicated passenger numbers are likely to return to just half of the pre-covid levels next year.
BoE Survey: 60% of respondents predicted interest rates to rise during the next year, up from 43% in August.
France's Europe Affairs Minister Beaune: We will ask the European Commission to announce litigation if the fishing issue is not resolved by this evening.
According to industry sources, at least two North Asian refiners will receive full Saudi crude allocation in January.
Japan's PM Kishida: The sales tax rate will not be adjusted for the time being.
Monday FX Options Expiries
USD/JPY: 115.00 ($550M), 114.00 ($392M), 112.20 ($375M)
EUR/USD: 1.1320 (EU2.02B), 1.1250 (EU1.44B), 1.1370 (EU764.7M)
USD/CNY: 6.3500 ($1.88B), 6.2500 ($1.45B), 6.0500 ($500M)
USD/BRL: 5.65 ($628M)
GBP/USD: 1.3150 (GBP711.8M), 1.3200 (GBP560.3M), 1.3235 (GBP495.6M)
USD/CAD: 1.2750 ($448M)