Inflation “broke 7”, Powell and Brenner’s speeches at the hearing may have an impact on US debt
The minutes of this week’s Fed monetary policy meeting are “Hawking”. At present, every move of the Fed affects the market nerves. After the release of the minutes of the interest rate meeting in December, the market’s expectation of a possible interest rate increase in March was as high as 90%.
It is worth noting that on Tuesday, Federal Reserve Chairman Powell will attend a congressional nomination hearing, when members will vote on whether to approve his nomination for re-election. The focus of the market is that Powell may echo the tone of the minutes of the Federal Reserve meeting released last Wednesday at his first public meeting this year.
In addition, the nomination hearing for Federal Reserve governor brenard as vice chairman will be held on January 13 local time.
In addition to Powell’s and Brenner’s hearings, the upcoming U.S. December consumer price index (CPI) and producer price index (PPI) have attracted much attention.
Inflation may continue to be the focus of market attention. It is generally expected that the CPI of the United States may continue to have a high fever in December, and the year-on-year growth rate will rise to 7.1%, maintaining the highest level in 40 years. Previously, the US CPI reached 6.8% in November, a new high in nearly 40 years.
According to the research of UBS Securities, in December CPI, although the increase of food and energy prices slowed down, the core price is expected to continue to rise rapidly in the next few months. Among them, the price of motor vehicles is still strong; Import prices have risen steadily and there should be additional strong increases in tenant rents. In addition, it is expected that air tickets and medical services, which are driven by the soaring price of medical insurance, will also make a great positive contribution.
It is expected that the overall CPI inflation rate will exceed 7% in December, reach a peak of about 7.3% in January and February, and then continue to decline in spring.
The hearing speeches of two leading figures of the Federal Reserve and the “breaking 7” of US inflation may have an impact on the bond market, thus affecting the performance of the overall financial market. The global market should keep a close eye on the performance of US bonds.
Bank stocks will kick off the earnings season on Friday
Affected by the minutes of the hawkish meeting of the Federal Reserve and the expectation of raising interest rates, US stocks recorded the worst weekly performance since February 2021. Science and technology stocks were particularly hard hit, and most science and technology growth stocks were violently sold off.
However, as the rise in interest rates will contribute to the expectation of corporate profit prospects, bank equity week hit its best opening performance in more than a decade, saving the plummeting U.S. stocks.
Bank stocks will open the curtain of the fourth quarter earnings season of U.S. stocks, which has attracted much market attention. Big banks JPMorgan Chase, Citigroup and Wells Fargo will report earnings ahead of Friday.
It is expected that the soaring interest rate may set the tone for the stock market after making the stock market volatile at the beginning of the new year. Leo grohowski, chief investment officer, wealth management, Bank of New York Mellon, said:
Inflation and the Federal Reserve will continue to be the theme. With the rise of interest rates, we believe that the first quarter of 2022 will perform well, and we are generally optimistic about corporate earnings prospects.
In addition, Delta Airlines’ performance released on Thursday can help investors understand how airlines respond to the surge of covid-19. As well as JB hunt transportation service company, including freight giants, P & G, a consumer goods company, and Baker Hughes, an oil field service company, will also release financial reports.
According to FactSet, analysts estimate that profits of Companies in the S & P 500 index rose 22% year-on-year in the fourth quarter. This will be a higher than average growth rate, but much lower than in the past few quarters, of course, when it was in the stage of low comparative base. For example, in the second quarter of 2021, the earnings of the S & P 500 index increased by 91%.
It is expected that the earnings of S & P 500 companies will increase by 9.4% in 2022, lower than the estimated profit growth rate of 45% in 2021.