5 Keys on Wall Street By

© Reuters

By Geoffrey Smith – Rising bond yields continue to pressure equities following a labor market report that showed inflation pressures continue to bubble. China’s zero tolerance policy regarding Covid-19 comes under new strain amid tests of community spread in a key port city. The United States and Russia reduce the chances of progress in starting negotiations to de-escalate the situation in Ukraine, and oil prices stabilize after a decrease in disruptions in Kazakhstan and Libya. This is what you need to know in the financial markets on Monday, January 10.

1. Yields go up after payrolls; pronostics by Goldman

Bond yields continued their upward march after Friday’s U.S. employment report again highlighted the rigidity of the labor market, with a sharper-than-expected rise in wage costs and a larger fall of the expected unemployment rate.

Goldman Sachs analysts now forecast 4 interest rate hikes by the Federal Reserve this year, and there was no implicit contradiction from Richmond Federal Reserve Chairman Tom Barkin in an interview published by The Wall. Street Journal on Monday, saying that a rate hike as early as March is “conceivable.” Goldman also expects the Fed to start selling its bond holdings from July.

The interest rate sensitive 2-year Treasury yield remained near its two-year high at 0.87%, while the 10-year benchmark yield rose to 1.78%. European bond yields flattened after hitting their highest level in a couple of years last week.

2. Summary of Omicron: The UK wave begins to peak; Australia’s zero-tolerance policy falters, China’s under pressure

The changing nature of the pandemic was evident in new data from around the world. Optimists will be buoyed by signals from the UK, the first advanced economy to register a wave of the Omicron variant, suggesting that new infections have peaked in the capital London, without overloading the healthcare system.

The pessimists, however, point to the increase in the number of cases from the United States to India and Australia, along with a parallel increase in absenteeism of frontline workers in the service sector, especially in the health sector.

The Omicron variant has disrupted Australia’s zero coronavirus policy, which had been in place for two years until last week. However, China continues to hold that line, with a massive testing campaign in the key port city of Tianjin, after two locally transmitted Covid-19 cases were discovered last week.

3. Stocks will open mostly lower. The marijuana stock earnings

US stocks will open mostly lower, with tech again underperforming amid rising bond yields. Rising interest rates raise the opportunity costs of betting on companies with only long-term profit prospects, and the long-term rate swing has cruelly exposed the exorbitant valuations of many of those companies.

As of 6:15 AM ET, the {{8873 | Jones Futures}} were flat, while the {{8839 | 500 Futures}} were down 0.1% and down 0.3%.

The session is expected to be very low-key ahead of consumer price inflation data to be released later this week. The focus may turn to a JPMorgan investment conference ahead of the traditional start to earnings season on Friday, when Wall Street’s top companies begin reporting. Cannabis company Tilray spearheads a short-lived results program Monday. Other stocks in the spotlight will be Lululemon Athletica, after the yoga apparel maker issued a profit warning.

4. Russia and the US talk about Ukraine after crushing Kazakh protests

The United States and Russia have started talks to ease tension around Ukraine, but both sides have warned that it will be difficult to move forward.

Russia seeks guarantees that Ukraine will never be admitted to NATO, while the United States maintains that Ukraine should be as free as any other country to choose its political alignment. More than 100,000 Russian soldiers remain concentrated on the border between Russia and Ukraine. Neither the European Union nor Ukraine itself are part of the talks, unlike the negotiations that took place after the first Russian invasion of Ukraine in 2014 and the subsequent annexation of Crimea.

The talks come a week after Russian-led troops largely restored order in the former Soviet republic of Kazakhstan, bolstering Russian power in central Asia.

5. Oil prices soften as production interruptions are overcome

Oil prices stabilized as shortages of exports from Kazakhstan and Libya last week began to subside. The company led by Chevron (NYSE 🙂 which operates Tengiz, a 600,000 barrel-a-day field in Kazakhstan, said Sunday that the field is gradually returning to normal production levels after protests disrupted production last week.

Meanwhile, in Libya, works on an export pipeline, which last week had reduced production by 200,000 b / d, have concluded and allow the country to produce a total of 900,000 b / d. Tensions related to the country’s civil war continue to ensure that production remains well below the country’s potential.
At 6:25 AM ET, futures were down 0.3% at $ 78.69 a barrel, while it was down 0.1% at $ 81.64 a barrel.

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Helen Hernandez is our best writer. Helen writes about social news and celebrity gossip. She loves watching movies since childhood. Email: Phone : +1 281-333-2229

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