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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.

US Dollar Index Struggles to Surpass 104.00 as US Inflation Rate Rises

Daniel Rogers

May 11, 2022 10:06

The US dollar index (DXY) is equilibrating below the round level mark of 104.00 as market players lose interest in the release of US inflation data. The asset has been fluctuating between 102.35 and 104.20 since April 28 amid a flurry of key economic events, ranging from the Federal Reserve's (Fed) interest rate decision and the announcement of US Nonfarm Payrolls (NFP) last week to the impending Consumer Price Index (CPI) statistics.

US CPI Figures

The US Bureau of Labor Statistics is anticipated to report an annual inflation rate of 8.1 percent, a decrease from the previous rate of 8.5 percent, while the core CPI, which excludes food and energy, is anticipated to reach 6 percent. Although inflation is anticipated to be lower, this does not guarantee that the Fed will not raise rates in June. If the annual inflation rate rises over the multidecade high of 8.5%, investors should anticipate greater volatility. 

Fed's Mester's address

Loretta Mester, president of the Federal Reserve Bank of Cleveland, stated that the Fed will not ease its stance on interest rates until it observes a significant decline in inflation levels. Inflation rates are skyrocketing, and the current scenario necessitates tougher measures to curb the rate of inflation's ascent.

 

Important events this week include the Consumer Price Index (CPI), Initial Jobless Claims, and the Producers Price Index (PPI), as well as the Michigan Consumer Sentiment Index (CSI).

 

On the back burner are the Russia-Ukraine Peace Talks, China's CPI, and Christine Lagarde's address as President of the European Central Bank (ECB).


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