Macroeconomic/ geopolitical developments
- Many global financial markets moved to a “risk off” theme to start December as positive economic data from the US raised fears of a resumption of a more aggressive rate hiking standpoint from the US Federal Reserve.
- The prior week ended with a positive US Employment report, which saw a negative reaction from US and global stock markets,
- Last week saw the Services Purchasing Managers Index (PMI) data from the US Institute of Supply Management (ISM) released on Monday, which was higher than the expectations for a small decrease rising to 56.5, near the highs from recent months.
- This went hand in hand last week with negative comments on the economy from Goldman Sachs’ CEO David Solomon and JPMorgan Chase CEO Jamie Dimon, which somewhat filled a void from the blackout period of Fed speakers ahead of next week’s final Federal Reserve Open Market Committee (FOMC) meeting of 2022, on Wednesday.
- In addition, Friday’s PPI release was above consensus around 7.2%, coming in at 7.4% (on a year-over-year basis), which assisted the “risk off” tone.
- Chinese stock markets rallied as Beijing shifts from its zero-COVID to a reopening, with announcement of a rapid easing of coronavirus pandemic restrictions.
- However, this positive step from China did not manage to fully ease the “risk off” theme seen across many global financial markets.
Global financial market developments
- The major US stock averages fell last week reversing gains from the prior week’s surge (after comments from Fed Chair Jerome Powell).
- European equity indices were also lower last week, having risen for seven straight weeks, but Asian averages were generally higher.
- US Treasury yields pushed lower to new multi-month yield lows, before retracing somewhat.
- The US Dollar Index consolidated after the nudging to new multi-month lows across this.
- Gold consolidated the advance from the November surge from a multi-month low to another new multi-month high.
- Oil prices plunged to a 2022 low, resuming bigger negative pressures.
- Copper consolidated the prior week’s strong bounce in a broader range/ bottoming phase.
Key this week
- Central Bank Watch: We get the final Federal Reserve Open Market Committee meeting of 2022 and interest rate decision and press conferenceon Wednesday, then both the Bank of England (BoE) and European Central Bank (ECB) interest rate decisions and press conferences on Thursday.
- Macroeconomic data: US CPI is the big data focus this week, released on Tuesday, as well as a slew of UK data through the week, US Retail Sales is out Thursday, and global S&P Global Flash PMI are released on Friday.
|Key Macroeconomic Events
|UK GDP, Industrial and Manufacturing Production
|UK Employment; German CPI; German and EU ZEW Survey; US CPI
|Japan Tankan report; UK inflation report (including CPI); FOMC Meeting, interest rate decision and press conference
|Australia Employment; China Industrial Production and Retail Sales; BoE and ECB interest rate decisions and press conferences; US Retail Sales
|UK Retail Sales; global S&P Global Flash PMI