- Stocks fell after Federal Reserve Chair Jerome Powell considered ending bond tapering sooner, with traders increasing their bets on the rate of interest-rate hikes.
- The treasury curve flattened sharply in a wild trading session for markets, with the premium of the 30-year rate over the five-year yield tumbling. In addition, Powell told a Senate Banking Committee that it is past time to abandon the term "transitory" to describe inflation. The S&P 500 fell nearly 2%, while the CBOE volatility index posted its biggest monthly gain since February 2020.
- According to money markets, a rate tightening of 55 basis points, or more than two standard quarter-point increases, is now priced in by the end of 2022. This is an increase from around 50 basis points on Monday. The first full hike is still scheduled for July. Fed officials have repeatedly stated that they want to complete the taper before raising borrowing costs from near zero, where they have remained since the pandemic began.
- In his opening remarks, Powell stated that the recent increase in COVID-19 cases, as well as the emergence of the Omicron strain, pose "downside risks to employment and economic activity, as well as increased uncertainty for inflation." During the question-and-answer session that followed, he focused on the evidence of higher prices since officials met on November 2nd-3rd.
- Concerns about the effects of Omicron weighed on markets earlier Tuesday, with Moderna executives claiming that the numerous mutations indicate that new shots will be required. According to the CEO of BioNTech, the current generation of vaccines will most likely protect against severe disease in people infected with the variant. According to the University of Oxford, there is no evidence that existing shots will not provide some protection against the strain.
- Consumer confidence in the United States fell to a nine-month low in November, as a rise in COVID-19 cases and accelerating inflation weighed on Americans' views of the economy. Final sales for Cyber Monday fell short of expectations due to a lack of inventory, which kept shoppers from using their credit cards at the start of the holiday shopping season.
