MILANO – The markets remain focused on the possibility of an acceleration in the path of normalization of monetary policy Federal Reserve. A Goldman Sachs report, which comes after the minutes of the December 14-15 meeting from which “hawkish” tones emerged at the American Central Bank, now predicts that there will be four rate hikes this year and that the inflated budget from the extraordinary anti-Covid measures it will begin to shrink from July, if not sooner. Throwing these beliefs are the notes of the Fed on progress in the labor market, which shifts the theme of inflation to wage growth as well, and the conviction filtered by American bankers of having to move with greater incisiveness than the last path of monetary tightening. .
This situation has caused bond yields to rise globally, obviously starting with US Treasuries: the reaction to the first rate hike ahead of the pre-pandemic era is stronger than concerns that the Omicron variant could derail the recovery. Themes that are also intertwined in the reflections of International Monetary Fund, in view of the estimates of January 25: a post by economists Stephan Danninger, Kenneth Kang and Hèlène Poirson reports that the global recovery continues, but there are high risks due to the resurgence of the pandemic. Experts especially warn emerging economies that they should prepare for “episodes of economic turbulence” in view of the rate hike that should soon be decided by the US central bank. According to IMF economists, “the risks to growth remain high due to the persistent resurgence of the pandemic” given that since mid-December, the Omicron variant has spread rapidly around the world, with a record number of infections recorded in this fourth wave of the pandemic. While Omicron is less lethal than Covid-19 and previous variants, it requires restrictions that compromise growth to stem it. “Given the risk that this could coincide with a more rapid Fed rate tightening, emerging economies should prepare for bouts of economic turbulence,” the Fund officials write, especially as these countries are already facing “high inflation” and “a significantly higher public debt”. Ultimately, a faster Fed rate hike could “shake up financial markets and tighten financial conditions globally,” the blog authors add. The risk is a slowdown in demand and trade in the United States, as well as capital outflows and a depreciation of the currency in emerging markets. The IMF recommends that emerging markets take steps “now to reduce their vulnerabilities”.
In the difficult race to the Quirinale, the markets vote for stability
by Flavio Bini
On the equity front, caution seems to prevail, in view of the data onUS inflation expected in the week. Futures on the European markets are cautiously higher, those on Wall Street are mixed. On the timing of the rate hike, indications are also expected from the Fed president Jerome Powell and Governor Lael Brainard who will hold confirmation hearings this week.
The macroeconomic agenda foresees the same day data on unemployment at the Eurozone level, investor confidence still in the single currency area and therefore sales and wholesale stocks in the USA.
Among the raw materials, we note the rise in prices of Petroleum: on the crude oil market, supply interruptions in Kazakhstan and Libya offset concerns arising from the rapid global increase in Omicron cases. Brent rose 0.04% to $ 81.78 a barrel while WTI gained 0.08% at $ 78.96 a barrel. Oil prices gained 5% last week after protests in Kazakhstan shut down railway lines and hit production at the country’s main oil field, Tengiz, while maintenance of an oil pipeline in Libya brought production to 729,000. barrels per day from a high of 1.3 million bpd last year.
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