Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
25 January 2022
Investors started the week with a pronounced risk-off mood and demand for safe assets rose amid rising geopolitical tensions between Russia and Ukraine. In stock markets, volatility went up and losses were broad-based across the board, although dip buyers pushed US indices back to positive territory late in the session.
Investors traded cautiously in the last session of the week, still digesting the more hawkish shift by the major central banks and with a weaker-than-expected start of the Q4 earning seasons for US banks. Monthly data also showed a decline in retail sales (-1.9% m/m) and industrial production (-0.1% m/m) in the US in December.
Investors traded cautiously on Wednesday, digesting the December inflation print in the US, which showed headline inflation rising to 7.0%, highest since June 1982, and core inflation increasing by 0.6 pp to 5.5% yoy. Even if in line with consensus expectations, these figures add pressure to the Fed to start hiking interest rates as soon as in March.
In yesterday's session investors traded cautiously amid expectations of a faster monetary policy tightening from the Fed. Implicit interest rates are discounting the first rate hike in the spring, earlier than previously expected. The inflation report to be released this Wednesday and the speech by the Fed head Powell in Congress today will be key.
In the last session of the week, investors continued to digest the hawkish messages of the minutes of the last Federal Reserve meeting as well as relevant economic data releases. In the US, non-farm payrolls increased in December by 199k (consensus expected +400k) and the unemployment rate declined by 0.3 pp to 3.9%.
During a volatile session, financial markets ended the day with further losses, as investors digested the more hawkish tone in the minutes of the December Fed meeting, which hinted at the possibility that policy interest rates could be raised “sooner or at a faster pace” than officials had initially anticipated.