- US Treasury yields pause recent declines, S&P 500 Futures print mild losses.
- US inflation matched hawkish forecasts but market players sold the facts.
- Latest Fedspeak bolsters rate hike concerns ahead of blackout period, virus, geopolitics also test sentiment.
- US PPI, comments from Fed policymakers and second-tier job numbers eyed for fresh impulse.
After portraying a surprise positive reaction to the 40-year high US inflation data, risk appetite wanes during early Thursday. While tracking the catalysts, the recently hawkish comments from the Fed policymakers and geopolitical headlines, coupled with the virus updates, could be found guilty.
US CPI jumped to the highest levels since 1982 while matching 7.0% YoY forecasts, up from 6.8% previous readouts. The monthly figures rose to 0.5% versus 0.4% expected but softened below 0.8% prior.
Following that US inflation data, Federal Reserve Bank of St. Louis President James Bullard said, per Wall Street Journal (WSJ), “Four rate hikes in 2022 now appear to be on the table and, in the face of high inflation, a rate hike in March seems likely.” On the same line were comments from the member of the Fed Board of Governors and incoming Vice Chairman of the FOMC Lael Brainard who said, “Inflation control is Fed's most important task. Additionally, President and CEO of the Federal Reserve Bank of San Francisco Mary Daly signaled a rate hike as early as March.
Elsewhere, “Deputy US Trade Representative (USTR) Jayme White expressed Washington’s ongoing concern about Canada’s proposed digital services tax in talks on Wednesday with Canada’s deputy trade minister, David Morrison,” USTR said in a statement per Reuters.
Furthermore, US Ambassador to the United Nations (UN) Linda Thomas-Greenfield tweeted the proposal to levy extra sanctions on North Korea for the latest slew of missile tests.
Amid these plays, US 10-year Treasury yields add 2.5 basis points (bps) to regain 1.755 level whereas the 2-year counterpart rises 1.6 bps to 0.923% by the press time. Further, S&P 500 Futures drop 0.20% intraday after the Wall Street benchmarks closed with mild gains.
Moving on, the Fed policymakers’ speeches will be crucial for near-term market direction as they approach the blackout period before the monetary policy meeting, during January 25-26. Also important will be the US Producer Price Index (PPI) for December and weekly jobless claims. Should the incoming catalysts keep flashing challenges to market sentiment and support Fed’s faster rate hikes starting from March 2022, US Treasury yields may extend the latest rebound, underpinning the USD recovery and challenging the commodities as well as Antipodeans.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Follow us on Telegram
Stay updated of all the news
EUR/USD climbs to fresh daily highs above 1.0700
EUR/USD has regained its traction and climbed to a fresh daily high above 1.0720 in the second half of the day on Thursday. Despite the upbeat ADP employment data, the downward revision to Unit Labor Costs for the first quarter triggered a fresh leg of USD selloff, boosting the pair.
GBP/USD tests 1.2500 as USD continues to weaken
GBP/USD has extended its daily rebound toward 1.2500 in the American session. The US Dollar continues to weaken against its rivals as soft wage inflation data feed into expectations for a pause in Federal Reserve rate hikes at the upcoming policy meeting.
Gold climbs above $1,970 as US yields extend slide
Gold price climbed above $1,970 in the American session on Thursday. Following weak wage inflation data from the US, the benchmark 10-year US Treasury bond yield is down more than 1% on the day below 3.6%, fuelling XAU/USD's daily rally.
XRP unlocks tokens worth $500 million as SEC vs. Ripple verdict looms
Ripple, the cross-border payment remittance giant, has unlocked a total of 1 billion XRP tokens from escrow on Thursday. This unlock is a part of the scheduled monthly distribution strategy of the XRP token.
LCID sheds 13% with $3 billion share sale
Lucid Group (LCID), the maker of the Lucid Air luxury electric sedan, surprised shareholders late Wednesday when it announced that it would raise $3 billion in new common stock.