Macroeconomic/ geopolitical developments
- Concerns that the omicron strain of COVID-19 could contribute to supply chain disruptions and weigh on global economic growth have impacted “riskier” assets.
- This has been intensified by relatively “hawkish” comments from Federal Chair Jerome Powell in testimony to Congress, indicating inflation worries and the potential to speed up the tapering of bond purchases.
- “Safe haven” assets benefited, with global bond markets rallying to multi-week low yields.
- In addition, “riskier” assets suffered after Friday’s release of the US Employment report saw the Nonfarm payroll element increases by 210K for November, significantly below the consensus estimates of 546K.
Global financial market developments
- Global stock averages plunged further from November cycle/ record highs last week, as risker assets were impacted by omicron fears and inflation/ taper worries.
- US (and global) bond markets rallied to lower yields in a flight to quality, in the wake of the above concerns
- The US Dollar was lower within G3, with the Euro and Japanese Yen benefiting with safe haven status.
- But the risk currencies, the Australian, New Zealand and Canadian Dollars all lost ground versus the US Dollar.
- Gold stayed negative, despite the “risk off” theme.
- Oil extended its late November plunge and stays negative.
- Copper marked time last week but retains a negative tone within a broader range.
Key this week
- Geopolitical focus: Watching for more details of the Omicron strain of COVID-19.
- Central Bank Watch: Central Bank activity includes the Reserve Bank of Australia (RBA) interest rate decision, statement and press conference on Tuesday and the Bank of Canada (BoC) interest rate decision, statement and press conference on Wednesday.
- Macroeconomic data: The standout data points for the week are the CPI data from China, Germany and the US and the EU and UK GDP data.
| Date | Key Macroeconomic Events |
| 06/12//21 | Nothing of note |
| 07/12//21 | RBA interest rate decision, statement and press conference; EU GDP; German ZEW Survey |
| 08/12//21 | Japan GDP; BoC interest rate decision, statement and press conference |
| 09/12//21 | China CPI |
| 10/12//21 | UK GDP, Industrial and Manufacturing Production; German CPI; US CPI |
