Trader’s Diary: Everything you need to get ready for the week ahead
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Risk-off sentiment dominated the market last week as investors began piling into the bond market.
The benchmark 10-year US bond yield rose 5 basis points to 1.83%, its highest level in two years as traders price in expected rate hikes by the Fed.
Combined with an annual CPI growth of more than 7% (the highest level since 1982), the prospect of tighter monetary policy this year is now firmly accepted by markets.
The number of Americans applying for unemployment benefits also rose to the highest level in three months, rising by by 55,000 to 286,000, the highest level since mid-October.
Elsewhere overseas, China’s central bank surprised the market last week by lowering the interest rates on its medium term notes by 10 basis points, a clear move to jumpstart a shaky economy wobbled by the ongoing troubles in its property sector.
At home, the recent spread of Omicron variant has battered the Australian retail sector, with consumer confidence falling to the lowest level in more than a year.
The weekly ANZ/Roy Morgan survey showed consumer confidence index was at 97.9, a 7.6% drop from last week and the lowest since October 2020.
The index is usually a good gauge of people’s willingness to make discretionary purchases.
A 4.2% jobless print that saw the rate falling to its lowest level since 2008 has also made investors nervous about a potential RBA hike.
The RBA will convene for its first meeting of the year on February 1, and analysts predict a rate hike announcement then.
Meanwhile, a CPI release this coming Tuesday will be one the gauges the RBA will use to make its decision.
It will be a short week of trading in Australia, as the ASX will pause on Wednesday for Australia Day.
The main economic headline will be Tuesday’s CPI data.
Consumer price index/inflation for December. After rising by 0.8% in the September quarter, CBA analysts now expect inflation could grow by another 1.1% this quarter.
ANZ and Roy Morgan weekly consumer confidence index.
Producer Price Index (PPI) for December quarter. PPI is a measure of business inflation.
The week will be highlighted by the Fed’s monthly meeting on Tuesday, and GDP numbers on Thursday.
The Fed central bank meeting will be convene starting today. Rate hike and bond tapering will be high on the agenda.
US home prices index for November.
US new homes sales for December.
US economic growth (or GDP) for the December quarter. CBA says annual GDP growth could come in at 6%.
Business and consumer confidence for January. Consumer confidence for December. Consumer Inflation Expectation for January.
According to the ASX, these companies will make their ASX debut this week.
Belararox Ltd (ASX:BRX), an explorer with a focus on developing the Belara Project and the secondary Bullabulling Project tenements located in NSW and WA respectively. The company raised $6m at 20c a share.
Cosmo Metals (ASX:CMO), an explorer that raised $7m at 20c.
Felix Gold (ASX:FXG), an explorer that raised $10m at 20c.
Firebrick Pharma (ASX:FRE), a pharmaceutical development and manufacturing company that raised $7m at 20c.
Virdis Mining and Minerals (ASX:VNM), an explorer that raised $5.5m at 20c.