The Federal Reserve will accelerate the contraction process, and the US employment data are mixed. The minutes of the FOMC meeting in December released by the Federal Reserve this week are very hawkish. In addition to the expected acceleration of the taper process, the Federal Reserve also said that it is necessary to raise the federal funds rate in advance or at a speed higher than previously expected by the participants. The dot matrix shows that the Federal Reserve will raise interest rates three times in 2022 and three times in 2023. After the announcement of the meeting minutes, the yield of US Treasury bonds rose collectively. The yield of 10-year US Treasury bonds once approached the high point in March last year, and the possibility of the Fed raising interest rates in March showed by money market prices rose to 80%. On the other hand, the US non farm payrolls in December 2021 announced on Friday increased by only 190000, far less than market expectations and the lowest growth rate in the past year, but the unemployment rate fell to 3.9%, a new low since the epidemic. Although the US Federal Reserve released hawkish signals to bring some support to the US dollar, the US dollar index fell 0.5% to 95.7478 on Friday and 0.5% on the week, dragged down by the cold non farm employment data. Most non-U.S. currencies rose. The euro rose 0.56% to 1.1361 against the US dollar on Friday and fell 0.07% week on week. Affected by the sharp rise in energy prices, the CPI of the euro zone rose 5% year-on-year in December, higher than market expectations and a new high. ECB officials reiterated that it is unlikely to raise interest rates in 2022 and that inflation will decline but will be higher than long-term expectations. Sterling rose 0.41% to 1.3589 against the US dollar on Friday, up 0.44% this week. Despite the severe epidemic in the UK, the impact of Omicron on the economy is limited, and the UK manufacturing PMI still rose more than expected in December. In the stock market, affected by the expectation of the Federal Reserve raising interest rates in advance, the risk appetite of the global market was frustrated, the three major U.S. stock indexes closed lower, and the NASDAQ index and the S & P 500 index fell for four consecutive days. In terms of commodities, the expectation of the Federal Reserve raising interest rates in advance put pressure on the international gold price, and Comex gold futures fell 1.76% to US $1796.5/oz this week. In addition, the tight supply caused by geopolitical turmoil and the easing of Omicron's concerns helped the international oil price rise for the third consecutive week. The US oil contract in February 2022 rose 4.96% to US $78.94/barrel.
The economic prosperity recovered and the supply and demand sides improved at the same time. In December, the new order indexes of manufacturing and service industries were in the expansion range, and the manufacturing production index further rose, and the market supply and demand improved. Measures to ensure supply and stabilize prices of bulk commodities continued to be effective, inflationary pressure eased, and the growth of relevant price indexes in manufacturing and service industries slowed down. Meanwhile, the export index continued to grow and external demand remained stable. However, it should be noted that the employment market is still under pressure, the economic foundation is not solid, the optimistic expectations of enterprises have weakened, the recurrence of the epidemic and overseas demand are still unstable factors. Stabilizing the economy will become the main line of economic work in 2022. For some time to come, the policy level should strengthen the priority orientation of employment, strengthen targeted support for small and medium-sized enterprises, and enhance policy continuity, stability and predictability.
This week, the Central Bank of China made a net return of 660 billion yuan in the open market. In terms of policy, on November 5, leaders of the State Council chaired a symposium on tax reduction and fee reduction, emphasizing that in the face of new downward pressure on the economy, we should continue to do a good job in the "six stabilities" and "six guarantees", and implement greater combined tax reduction and fee reduction according to the needs of market subjects, so as to ensure a stable economic start and stabilize the macro-economic market in the first quarter. In terms of capital market, all major market indexes fell this week, and the Shanghai index fell 3600 points in a continuous correction. Among the three indexes, the gem index fell the most, falling below the semi annual line and then below the annual line. The overall science and innovation sector showed a volatile downward trend.
