Investors have dumped equities at a record pace in the days since major central banks signaled, they won’t be deterred in their fight against inflation—a fitting end to the worst year for world stocks since the global financial crisis. Equity funds were hit by outflows of almost $42 billion, the highest ever, in a week when the Federal Reserve, the European Central Bank and the Bank of Japan all sounded staunchly hawkish notes in their policy outlook for next year, squashing bets of an imminent return to the era of cheap money.
The markets drifted into a weary close ahead of the Christmas break and closed slightly higher on Friday and Treasury yields advanced as investors digested a deluge of economic data ahead of the holiday long weekend. But this capped a week fraught with worries over the Fed’s restrictive monetary policy and related recession fears, and volumes were way down, with thin trading volumes creating more exaggerated moves Thursday and Friday. On U.S. exchanges 7.75 billion shares changed hands on Friday compared with the 11.41 billion averages for the last 20 sessions.
On the political front, The U.S. House of Representatives passed the $1.7 trillion bill to fund government operations on Friday by a vote of 255-201, paving the way for President Joe Biden to sign it into law.
Investors have been jittery since last week as the Fed indicated that it remains stubbornly committed to achieving the 2 per cent inflation goal and projected rate hikes to above 5 per cent in 2023, a level not seen since 2007. The markets are on edge over what the path for Fed policy is going to be for next year as that’s going to drive the economy and corporate earnings.
CONTENT
0:00 Start
00:17 Introduction
2:00 US Macro
4:08 Latest PCE
6:35 US Markets
8:40 Gold, Oil
10:50 Europe
12:45 Japan Surprise
14:40 China and COVID
16:20 Australian Markets
19:45 Australian Macro
22:30 Crypto
23:40 Close
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