Financial Markets Daily Report
13 January 2022

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.

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  • 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 this context, yields on the short end of the US Treasury curve rose modestly while the long end remained stable. In the euro area, meanwhile, sovereign yields declined, in part by weak industrial production data (-1.5% yoy in November, down from a downwardly revised 0.2% yoy in October).
  • Elsewhere, most stock indices rose modestly, with gains being particularly pronounced in Asia and in emerging economies, and, in FX markets, the US dollar weakened against most advanced and emerging economies' currencies and the euro fluctuated above $1.14.
     
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