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On December 11th, Eric Winograd, chief U.S. economist at AllianceBernstein, stated in a report that the Federal Reserves decision to begin expanding its balance sheet to ensure the banking system has "ample" reserves and to resume purchasing short-term Treasury bonds should only affect the very short end of the U.S. Treasury yield curve, without impacting the longer-term portion. He pointed out that the Fed will resume its normalized purchases of Treasury bills, with an initial target of approximately $40 billion per month. "The impact of this decision on the market should be limited to the money market and the very front of the yield curve," he added. While the balance sheet expansion itself was not unexpected, some market participants had originally expected the Fed to wait until January to begin this operation.Eli Lilly (LLY.N) announced positive results from its obesity injection trial, sending its shares up 3.2% in pre-market trading.On December 11th, CIFI Holdings Group Co., Ltd., the domestic bond issuer of CIFI Holdings Group (00884.HK), announced its plan to repurchase seven outstanding corporate bonds issued by the company using its own funds, with a maximum repurchase amount of RMB 220 million. In September of this year, CIFI Holdings Group announced that its corporate bond restructuring plan, with a principal amount exceeding RMB 1 billion, had been approved. According to the approved resolution, the bond repurchase will commence within three months of the resolutions approval, with a repurchase price of 18% of the bonds face value. However, bondholders must waive all accrued interest. The announcement shows that the subscription period for this bond repurchase is from December 16th to December 23rd (trading hours only), and the redemption date is December 31st.The National Bank of Uzbekistan set its policy rate at 14%, unchanged from the previous rate.Starbucks union: Hundreds of newly joined baristas are on strike in 34 cities.

Markets Gripped by Recession Fears, US CPI in Focus

Skylar Shaw

Jul 13, 2022 16:21

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Tuesday saw a sea of red on the Asian stock market as risk appetite was stifled by concerns about the recession and a resurgent Covid-19 outbreak in China.

 

Prior to the US inflation data and earnings season, Wall Street's major indexes suffered overnight as investors fled to safety. Europe's energy crisis and increased caution in front of important economic data and bank profits are anticipated to cause markets to start lower there.


The dollar index (DXY) reached its greatest levels since 2002 in the currency markets, flexing its safe-haven capabilities. In the meanwhile, prices reached 1.0004 for the first time since December 2002 this morning, bringing the EUR/USD parity fantasy that much closer to reality. When it comes to commodities, gold is still down and unpopular, while demand worries have caused oil prices to decline.


The unease and gloom that permeate the financial markets may drive up the dollar more while driving down stock prices. The next US CPI data on Wednesday may cause a commotion since markets are still very volatile and sensitive to anything related to inflation.


Consumer confidence in Australia fell for the eighth consecutive month in July according to statistics.


Amid rising inflation, impending rises, and global unease, business confidence also fell short of expectations. Later this morning, the ZEW economic confidence poll for Germany will be released. A negative assessment might exacerbate the euro's problems and further devalue the single currency.

The US inflation data is what's important.


Investors are eagerly awaiting the publication of the US inflation data on Wednesday to see if prices are increasing once again or whether we have reached a high. Inflation is predicted to increase 8.8 percent year-over-year in June compared to 8.6 percent in May, according to a Bloomberg survey.

If predictions come true, consumer prices will have risen at the quickest rate since December 1981 when they increased by 8.9 percent. Such a scenario is likely to support market predictions of more aggressive Fed rate rises and eventually give dollar bulls new energy.


On Thursday, it could be a good idea to pay attention to the weekly unemployment claims report in addition to the US inflation statistics. There will also be a flurry of important announcements at the end of the week, including the most recent retail sales, industrial output, and consumer sentiment, all of which will shed light on the state of the US economy.

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