Ping An View:
Macro events of high concern in overseas markets this week: 1) the unexpected "Hawking" of the Federal Reserve. At the congressional hearing on November 30, 2021, Fed chairman Powell said that the term "temporary" might be abandoned to describe inflation, which surprised the market. 2) OPEC + held a ministerial meeting to unexpectedly maintain the production increase plan rather than the suspension of production increase expected by the market, but also said that "if the market changes, OPEC + may adjust the supply increase in the plan". 3) After the discovery of Omicron cases in the United States, the Centers for Disease Control and Prevention (CDC) said that Omicron strain may soon replace Delta as the leading covid-19 strain spreading in the United States. 4) The European Central Bank said that "inflation will decline in 2022". ECB president Lagarde pointed out at the Reuters next summit that the ECB "firmly believes that inflation will decline in 2022".
Overseas economic tracking: 1) US economy: non farm data were lower than expected, and PMI rose against the trend. The number of non farm payrolls in the United States increased by only 210000 in November, far lower than the 573000 expected by the market. The decline of new employment in manufacturing industry was contributed by durable goods manufacturing industry, especially automobile and parts manufacturing industry, while the new employment in non durable goods manufacturing industry remained stable. The situation of service production is not optimistic. Industries that need close contact, such as leisure and hotel industry, retail industry, education and health service industry, are the hardest hit areas. In November, the PMI of manufacturing and service industries in the United States rose against the trend, reaching 69.1 and 61.1 respectively, both in the rapid expansion range. 2) European economy: increasing inflationary pressure. Inflation pressure in the eurozone intensified in November, with HICP rising 0.8% to 4.9% year-on-year and 0.5% month on month. Among them, the commodity HICP reached 5.49% year-on-year, while the service HICP also reached 2.05% year-on-year, exceeding the pre epidemic level. 3) Overseas epidemic: the marginal continues to deteriorate, and the future is not optimistic. In the past week, the global epidemic spread rate is still accelerating, and the cumulative diagnosis growth rate in the past 7 days continues to rise compared with last week. As the more infectious Omicron begins to spread around the world, the overseas epidemic situation is still not optimistic at least in the next 1-2 months.
Global Asset Performance: stock markets, emerging markets recovered, and US stocks performed poorly. In the past week, the trend of major stock indexes in the world has been divided. Generally speaking, emerging markets perform better than developed markets. The Russian RTS index rebounded sharply, with an increase of 5.0% for the whole week. Most developed market indexes performed poorly, and the NASDAQ index fell 2.6%, the worst among the major stock indexes; In the bond market, the yield curve of US bonds continued to flatten. In the past week, the yield of 10-year US bonds has significantly decreased by 13bp to 1.35%, while the yield of 2-year US bonds has significantly increased by 10bp, and the yield curve of US bonds continues to flatten. The side reflects that the market's expectation of the Fed's interest rate increase continues to heat up. Looking back, in the coming months, the Federal Reserve may continue to strengthen its guidance for raising interest rates, and the US bond yield curve will continue to flatten, but RMB assets will still show resilience; Bulk commodities continued to cool as a whole. The emergence of Omicron virus continued to put pressure on crude oil prices, precious metal prices also fell slightly, and a few commodities such as iron ore and rebar recovered; In foreign exchange, the US dollar index strengthened slightly this week, rising 0.11% to 96.17, and the Australian dollar and New Zealand dollar depreciated sharply.
Risk tip: the situation of overseas epidemic has intensified, the persistence of overseas inflation has exceeded expectations, and the monetary policy of the Federal Reserve has exceeded expectations.
