Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Marketmind: More than four

Published 02/03/2022, 04:47 AM
Updated 02/03/2022, 04:56 AM
© Reuters. FILE PHOTO: Federal Reserve Board Chairman Jerome Powell leaves after a Senate Banking Committee hearing on The Semiannual Monetary Policy Report to the Congress on Capitol Hill in Washington, U.S., February 12, 2020. REUTERS/Yuri Gripas/File Photo

© Reuters. FILE PHOTO: Federal Reserve Board Chairman Jerome Powell leaves after a Senate Banking Committee hearing on The Semiannual Monetary Policy Report to the Congress on Capitol Hill in Washington, U.S., February 12, 2020. REUTERS/Yuri Gripas/File Photo

(This Jan. 27 story corrects to show in paragraph 4 that the gap between three- and six-month yields is at steepest since 2018, not 2015)

A look at the day ahead from Sujata Rao.

The world's largest economy is predicted to record GDP growth at a 37-year high of 5.5%, with data due later on Thursday. Some such as JPMorgan (NYSE:JPM) reckon the figure could be as high as 7.5%. We will also likely see weekly jobless benefits claims dropping further.

That, in a nutshell, is why the U.S. Federal Reserve feels there is "quite a bit of room to raise interest rates".

Could there be more than four rate rises this year? Powell did not deny that possibility, so markets have started to price a fifth move.

Accordingly, Treasury two-year borrowing costs hit 23-month highs, shrinking the gap with 10-year yields. And on t-bills, the shortest-dated debt segment, Tradeweb notes a sharp steepening, with the gap between the three- and six-month yields at the steepest since 2018, and more than double from a month-ago period.

Similar steepening is notable between other bill maturities in a sign more tightening is being priced.

So the stock market selloff that had abated pre-Fed is back in full swing, with world stocks down 0.6%; European and Wall Street looking set for another tumble.

But if buyers are running scared, there are bargain hunters of a different sort -- billionaire William Ackman said he had snapped up $1 billion worth of Netflix (NASDAQ:NFLX) shares since last Thursday's market tumble.

Companies, meanwhile, continue to deliver good news; Tesla (NASDAQ:TSLA) for instance predicted 50%-plus growth this year, while Deutsche Bank (DE:DBKGn) posted its biggest profit since 2011. But with buyers still in hiding, Tesla shares tanked in after-hours trade.

Key developments that should provide more direction to markets on Thursday:

-China's industrial firms saw December profits grow at slowest pace in 1-1/2 years

-German consumer morale improves slightly

-New Zealand inflation at three-decade high

-South Africa expected to raise rates by 25 bps

-U.S. durable goods/advance Q4 GDP reading/initial jobless claims

-U.S. 7-year note auction

© Reuters. FILE PHOTO: Federal Reserve Board Chairman Jerome Powell leaves after a Senate Banking Committee hearing on The Semiannual Monetary Policy Report to the Congress on Capitol Hill in Washington, U.S., February 12, 2020. REUTERS/Yuri Gripas/File Photo

-U.S earnings: Blackstone (NYSE:BX), Dow chemicals, Southwest airlines, McDonalds T Rowe Price (NASDAQ:TROW), Mastercard (NYSE:MA), JetBlue, Apple (NASDAQ:AAPL), Visa (NYSE:V), Mondelez (NASDAQ:MDLZ),

-European earnings: LVMH Moet Hennessy Louis Vuitton, Dr Martens, UniCredit Britvic, St. James's Place STMicroelectronics, SAP, Deutsche Bank, IG Group, Diageo (LON:DGE), Sabadell, SEB, Polymetal

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.