Overnight Headlines- Moderna (NASDAQ:MRNA) Chief Predicts Existing Vaccines Will Struggle With Omicron Variant
- US President Biden Warns Against Omicron Panic, Pledges No New Lockdowns
- US Congress Aims For Quick Passage Of Bill Averting Government Shutdown
- Senator Manchin Holds Off On Committing To Moving Biden Agenda This Year
- Fed Chair Powell To Tell Senate Omicron Poses Downside Risk To Economy
- Yellen Warns Failure To Deal With Debt Limit Would 'Eviscerate' US Recovery
- French PM To Offer Boris Johnson EU Migration Deal After Channel Deaths
- Half Of UK Companies Plan To Raise Prices To Offset Higher Wages: Lloyds
- EU, Russia And Iran Upbeat As Nuclear Talks Resume Amid Scepticism
- Chinese Manufacturing Rebounds In November With Signs Inflation Easing
- Japanese Output Rises For First Time In 4 Months As Supply Constraints Ease
The Day Ahead
Asian equity markets are down this morning as investors remain uncertain about the risks posed by the Omicron variant. In England, the government has announced an acceleration of its booster vaccine program. Meanwhile, in the US, President Biden said that no new restrictions were necessary at present.
The November Lloyds Business Barometer, which was released yesterday, edged lower for the second month in a row. However, the decline was a modest 3 points, leaving the headline reading still well above levels earlier this year and its long-run average. The survey showed that hiring intentions remained strong, although they have eased a touch since the end of the furlough scheme.
Meanwhile, wage pressures continued to build, and the percentage of firms expecting to raise prices rose to a record high. BoE policymaker Mann is set to speak this afternoon. She voted with the majority to leave interest rates unchanged in November and for an early end to the QE program. Mann has indicated that she favors a modest rise in interest rates in the coming months, but it was unclear even before the recent news on the virus whether she would support a December hike. Markets will focus on any comments on the potential impact of the new variant on the outlook for monetary policy.
US Federal Reserve Chair Powell will testify to Congress alongside Treasury Secretary Yellen later today. Powell is bound to be quizzed about the sharp rise in US inflation. Of most interest will be whether he offers any signals about the future policy response. Before last week's news, markets were increasingly speculating that the Fed would accelerate the tapering of its asset purchase program at its December meeting to open up an earlier than expected hike in interest rates. However, Powell's pre-released opening comments yesterday pointed to the downside risks to economic growth and employment, suggesting that any further action may now be delayed.
In the Eurozone, November CPI inflation is forecast to have risen further above the ECB's target and to a record high. Yesterday's rise in German inflation points to a risk that the rise may be more significant than expected. However, it will have little impact on interest rate expectations as ECB policymakers continue to signal that the increase is temporary and will not tighten monetary policy in response.