It didn’t take long for speedbumps to appear as markets rev up for 2022. Rising U.S. Treasury yields, sparked by growing speculation the Federal Reserve could start its rate hike cycle as early as March have doused early enthusiasm, just as the U.S. earnings season is about to kick off.
Big Wall Street banks JPMorgan, Citigroup and Wells Fargo will be first in line to report. Investors are keen to hear about inflation, whether companies believe the supply chain bottlenecks that helped drive prices up last year will ease in coming months and forecasts for 2022. S&P 500 profit growth is expected to slow to 8.4% from 49.7% in 2021.Chip East/Reuters
Investors will also keep a close on real yields since a view that inflation-adjusted yields will remain low has fueled the risk asset rally. The first week’s 30 bps jump in U.S. real yields may not make for a happy new year for some.Staff members tend a temporary stall set up for residents to buy food and daily necessities in a residential compound in Xi'an, China's northern Shaanxi province on Jan. 6, 2021.For millions in China the new year began as the old ended - under lockdown.
Once again, Russia plays a key role. The Kremlin deploying troops is widely seen as a gamble to secure its interests in the oil and uranium-producing Central Asian nation.