Global stocks decline as treasury yields continue to climb. UK December CPI data prints the highest since 1992
January 19, 2022
GBP/USD 1.3595 GBP/EUR 1.1997 EUR/USD 1.1332 USD/CAD 1.2516 EUR/CHF 1.03774 EUR/SEK 10.3609 EUR/NOK 9.9744 EUR/DKK 7.4425 USD/ILS 3.1422 AUD/USD 0.7183 NZD/USD 0.678 USD/SGD 1.3503 USD/JPY 114.42 USD/CNH 6.3542 USD/INR 74.6175 EUR/ILS 3.5606 GBP/ILS 4.2699 USD/ZAR 15.4816
The most recent price action in cable, coming off highs of 1.3744 at the start of the week to trade 0.93% lower now, is led by the current treasury yield rally. GBPUSD sits in the 1.3595 region as we print. GBPEUR rallied over yesterday's session, gaining as much as 0.65% to trade in the 1.1997 region as we print.
UK December CPI data prints the highest since 1992, coming in at 5.4% year-on-year according to the ONS, beating expectations for a reading of 5.2% and surpassing November's 5.1%. Markets are now expecting the UK Bank Rate to be as high as 1.25% by the time 2022 is complete.
Boris Johnson's likelihood of leaving is ticking higher as Cummings enters the fray at the worst possible time. The PM will fight yet another battle today in the House of Commons for PMQs this afternoon. A new group of Tory MPs have been plotting to oust him over the party allegations and met yesterday to discuss the possibility of a no confidence vote.
Boris is expected to announce a lifting of Covid curbs in England.EURThe German 10-year bund yield has turned positive for the first time since 2019. The rate rose as much as three basis points to 0.008% amid a backdrop of rising global bond yields. Given forecast GDP growth of above 4% for the euro zone this year and estimated consumer-price inflation of 3%, some may expect bund yields to climb further.
EURUSD declined as treasury yields increase, with EURUSD dipping as much as 1.04% this week, to trade in the 1.1338 region as we print. EURGBP retreated over yesterday's session to trade in the 0.8336 region as we print down 0.23% this week.
European shares declined along with global equities, with the Euro Stoxx, CAC and DAX dipping 0.09%, 0.01% and 0.41% since this morning's European open.
Daily Covid-19 cases in Germany topped 100,000 for the first time in a single day, joining countries like the U.K., France and Italy, with the country’s health minister warning that the crest of the wave is still weeks away. Infections in France hit a record 450k. The WHO warns that Omicron wont be the last variant and that comprehensive strategies are still needed to reduce severe disease.USDMomentum is building in the Treasuries selloff and benchmark yields look likely to hit 2% for the first time since 2019 as traders increase their bets on Federal Reserve rate hikes. The 10-year yield has climbed 37 basis points so far in January to 1.88% - set for its fastest monthly rise since November 2016. The pace of this move, increased most recently as markets now begin speculating the March hike could be as high as 50 basis points and not 25.
Stocks extended a global sell off on the prospect of a bigger Fed rate hike in March with the Dow Jones, S&P and NASDAQ dipping 1.51%, 1.84% and 26% respectively yesterday.
Americans can now order four free at-home coronavirus tests after the Biden administration launched its website a day early.ASIA/PACIFICAsian stocks extended losses, on the global sell off led by the prospect of a bigger Fed rate hike in March with the Nikkei and CSI dipping 2.8% and 0.69% respectively whilst the Hang Seng gained just 0.06%.
Brent extended its rally after a crucial pipeline that helps supply in Europe was hit by an explosion.ILSUSDILS continued this weeks rally, as higher treasury yields increase demand for the USD. USDILS trades in the 3.1373 region as we print up 0.72% this week.Data & EventsUK - CPI, house price index, BOE officials testify on financial stability
Germany - CPI
Euro Area - Nov construction output
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