Markets will wind down in coming days for the festive break. Then again, let’s not call it a day just yet.
The European Central Bank, in the spirit of Christmas perhaps, gave something to everyone - ending emergency stimulus next year cheers the hawks, opting for an open-ended existing asset purchase scheme makes the doves happy. Rising peripheral bond yields suggest some unease over easing support. U.S. consumer prices grew at their fastest pace in around four decades in November. Any signs that rising living costs and pandemic fatigue are weighing on spending - which accounts for over two thirds of U.S. economic activity - will not make for comfortable reading at the Fed.
Already, Brexit had capped Britain’s post-pandemic rebound. Now an Omicron “tidal wave” spells more trouble. Private sector growth plunged in December to a 10-month low, PMIs showed, yet 5%-plus inflation may force the Bank of England into several rate hikes next year. The regional election cycle continues in 2022. Colombia is scheduled to hold congressional elections in March and a presidential ballot in May. Brazil’s general vote in October will dominate investors’ focus, given the country’s economic weight in the region. So far, former leftist leader Luiz Inacio Lula da Silva has a comfortable lead in polls.Workers wearing face masks assemble electronic parts at a factory in Huaibei in central China's Anhui Province, Monday, Nov. 29.