Macroeconomic/ geopolitical developments
- Concerns that the Omicron strain of COVID-19 could contribute to supply chain disruptions and weigh on global economic growth have resurfaced over the past week.
- This has been driven by
- global medical institutions warnings of the more contagious aspect of Omicron
- the surging numbers of cases in many countries (for example the UK)
- worries above the efficacy of vaccines
- new restrictions being introduced globally
- The Federal Open Market Committee (FOMC) statement on Wednesday saw a more hawkish Fed, much of which was already discounted by the market.
- As expected, the Fed have accelerated the tapering of bond purchases and signalled interest rates hikes in 2022.
- On Thursday, the Bank of England (BoE) raised interest rates after high inflation data, which had not been anticipated by the market.
Global financial market developments
- Global stock averages were lower last week, led by the US indices and in particular the tech sector, after initial gains in the wake of the Fed decision.
- Despite the hawkish Fed shift, US yields tracked lower
- An erratic, but sideways week for Forex markets, with the US Dollar still strong within G3.
- The Pound stay weak, with GBPUSD vulnerable, despite the BoE interest rate hike.
- Gold shifted to a more positive tone.
- Oil marked time after the prior strong rebound.
- Copper bounced, but from a new multi-week low, retaining a negative tone within a broader range.
Key this week
- Geopolitical focus: Still watching for more details of the Omicron strain of COVID-19.
- Central Bank Watch: A quiet week for Central Bank activity with the RBA and BoJ Meeting Minutes on Tuesday and Wednesday respectively.
- Macroeconomic data: A quiet week for data, European markets are closed on Friday with a half day in the UK and US.
|Date||Key Macroeconomic Events|
|20/12/21||Nothing of note|
|21/12/21||RBA Meeting Minutes; Canada Retail Sales|
|22/12/21||BoJ Meeting Minutes; UK GDP; US GDP and PCE|
|23/12/21||US Durable Goods|
|24/12/21||European Holidays, markets closed, UK and US markets half day|