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Expect rally to turn tough as hot US inflation soars

An electronic stock quote board is displayed inside a hall in Tokyo
FILE PHOTO: An electronic stock quote board is displayed inside a conference hall in Tokyo, Japan November 1, 2021. REUTERS/Issei Kato

December 9, 2021

By Tom Westbrook

SYDNEY (Reuters) – Stocks rose in volatile trade on Thursday as concerns about the economic impact of the Omicron coronavirus variant eased but growing caution over US inflation data capped gains. other risky assets such as oil and the Australian dollar.

Bonds lose money because a brighter virus outlook leaves a clearer path to higher rates. Traders focus on Friday’s release of inflation data and a Federal Reserve meeting next week for signs of bullish timing. [US/]

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5% to a two-week high. Japan’s Nikkei index was steady, gaining 3.5% in the previous two sessions.

The S&P 500 cash index futures were steady after the cash index rose 0.3% overnight, taking it to a new record high within 1%. [.T][.N]

“Uncertainty remains elevated as the news drip around Omicron continues,” said analysts at ANZ Bank, adding that there are also periods U.S. interest rates are expected to be higher in 2022.

“The fact that the Fed accelerated the pace of deceleration is almost seen as a foregone conclusion. But a strong number could raise expectations for a spike in the second quarter of next year. “

On Wednesday, BioNTech and Pfizer said a three-shot round of their COVID-19 vaccine was able to neutralize the Omicron variant in a lab test.

Market sentiment has also recovered with other preliminary data suggesting Omicron is less severe than initially feared, although offsetting the imposition of tougher restrictions in the UK to limit the spread of coronavirus. Omicron.

The Australian dollar was up 2.6% in three sessions and was flat at $0.7166 in early Thursday trading. [AUD/]

Brent crude added $10 a barrel from last week’s three-and-a-half-month low and was steady at $75.82. [O/R]

China’s yuan held at 6.3458 per dollar after touching a three-and-a-half year high of 6.3438 on Wednesday, with a move to loosen monetary policy from next week seen as supportive. support the Chinese economy. [CNY/]

The pace of factory price growth in China slowed last month, data showed on Thursday, with an annual rate still at a whopping 12.9%, while inflation edged up to 2.3%. compared with the same period last year.

INFLATION AWAKENED

The main expected event of the week is Friday’s US inflation data, which is seen as a prelude to the Fed’s December meeting next week.

Fed funds futures are priced for a rate hike next May, and on Wednesday the two-year Treasury yield hit its highest since March 2020 at 0.7140%. They were steady at 0.6955% on Thursday and the 10-year yield held at 1.5332% after rising 4.6 basis points on Wednesday.

Economists expected annual US inflation to hit 6.8% last month, although previous results have surprised the upside.

“Seven is a big number that could be good for dollar bulls and drives yields on two-year Treasuries,” said Chris Weston, head of research at brokerage Pepperstone. higher growth”.

“But I think we need a steeper US Treasury yield curve to convince us of better growth in 2022.”

Wednesday’s moves were not enough to support the dollar, which has slipped sharply against the euro to trade at $1.1333 on Thursday morning. [FRX/]

Elsewhere in currency trading, the yen fell below the 50-day moving average to 113.76 per dollar. The pound fell to a one-year low of $1.31615 overnight with the announcement of tighter COVID-19 rules.

The US Dollar Index hovers at 96.029.

It recovered slightly to $1.3197 on Thursday. Gold is steady at $1,783 per ounce and bitcoin looks to have found a floor around $50,000.

(Reporting by Tom Westbrook; Editing by Sam Holmes)

https://www.oann.com/hope-rally-turns-choppy-as-hot-u-s-inflation-looms/?utm_source=rss&utm_medium=rss&utm_campaign=hope-rally-turns-choppy-as-hot-u-s-inflation-looms Expect rally to turn tough as hot US inflation soars

Bobby Allyn

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