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Market Talk – February 16, 2022

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China’s factory-gate inflation eased to its slowest pace in six months and consumer price growth also softened in January amid weakening property sector demand, new coronavirus curbs and government efforts to rein in surging materials costs. The producer price index (PPI) increased 9.1% from a year ago, the National Bureau of Statistics (NBS) said in a statement on Wednesday, slower than the 9.5% growth tipped by a Reuters poll and a 10.3% gain in December. It was the weakest pace since July. Analysts believe cooling inflation could provide room for the People’s Bank of China (PBOC) to ease policy to support the slowing economy, even as major central banks elsewhere tighten policy. China’s consumer price index (CPI) inched up 0.9% last month from a year earlier.
The major Asian stock markets had a mixed day today:• NIKKEI 225 increased 595.21 points or 2.22% to 27,460.40• Shanghai increased 19.74 points or 0.57% to 3,465.83• Hang Seng increased 363.19 points or 1.49% to 24.718.90• ASX 200 increased 78.00 points or 1.08% to 7,284.90• Kospi increased 53.14 points or 1.99% to 2,729.68• SENSEX decreased 145.37 points or -0.25% to 57,996.68• Nifty50 decreased 30.25 points or -0.17% to 17,322.20The major Asian currency markets had a mixed day today:• AUDUSD increased 0.00321 or 0.45% to 0.71828• NZDUSD increased 0.00333 or 0.50% to 0.66720• USDJPY decreased 0.208 or -0.18% to 115.443• USDCNY  decreased 0.0051 or -0.08% to 6.33307Precious Metals:• Gold increased 14.92 USD/t oz. or 0.81% to 1,867.98• Silver increased 0.175 USD/t. oz or 0.75% to 23.515Some economic news from last night:China:CPI (MoM) (Jan) increased from -0.3% to 0.4%CPI (YoY) (Jan) decreased from 1.5% to 0.9%PPI (YoY) (Jan) decreased from 10.3% to 9.1%Japan:Tertiary Industry Activity Index (MoM) remain the same at 0.4%Reuters Tankan Index (Feb) decreased from 17 to 6South Korea:Unemployment Rate (Jan) decreased from 3.8% to 3.6%Australia:MI Leading Index (MoM) increased from 0.0% to 0.1%

Britain’s labor market is flashing some warning signs for a central bank on guard against a wage-inflation spiral, economists said on Tuesday after official data showed a shrinking workforce and record levels of vacancies. Annual pay growth in the final quarter of 2021 picked up to 4.3% from 4.2% in the three months to November, reflecting bigger Christmas bonuses than a year ago. The central bank’s Monetary Policy Committee on Feb. 3 said it expected to tightening monetary policy again soon after raising interest rates for the second time in two months to curb surging inflation pressures. BoE Governor Andrew Bailey drew criticism from unions and a rebuff from Downing Street when he said this month that workers should rein in pay demands or risk a wage-inflation spiral.

The major Europe stock markets had a negative day:• CAC 40 decreased 14.99 points or -0.21% to 6,964.98• FTSE 100 decreased 5.14 points or -0.07% to 7,603.78• DAX 30 decreased 16.64 points or -0.11% to 15,396.07The major Europe currency markets had a mixed day today:• EURUSD increased 0.00194 or 0.17% to 1.13749• GBPUSD increased 0.00407 or 0.30% to 1.35810• USDCHF decreased 0.00389 or -0.42% to 0.92155Some economic news from Europe today:Norway:GDP (QoQ) (Q4) decreased from 3.9% to 0.1%GDP Mainland (QoQ) (Q4) decreased from 2.8% to 1.4%UK:CPI (MoM) (Jan) decreased from 0.5% to -0.1%CPI (YoY) (Jan) increased from 5.4% to 5.5%PPI Input (MoM) (Jan) increased from 0.1% to 0.9%Euro Zone:Industrial Production (YoY) (Dec) increased from -1.4% to 1.6%Industrial Production (MoM) (Dec) decreased from 2.4% to 1.2%US/AMERICAS:

The Federal Reserve minutes show what we knew all along – rates will be rising soon – although the sentiment was less hawkish than many expected. Sentiments from Fed presidents such as Bullard have caused analysts to predict seven 0.25 percentage point rate hikes this year, but the new report has led others to believe there is a chance of the central bank moving rates up only rise four times. The Fed will unwind its balance sheet significantly as it now sits at $9 trillion. The purchase program will cease in March with the Fed opting to buy $20 billion in Treasurys over the next months as well as $30 billion in mortgage-backed securities. All eyes will be on the Fed as members discern what to do about inflation, which has reached a 40-year high. “Participants acknowledged that elevated inflation was a burden on U.S. households, particularly those who were least able to pay higher prices for essential goods and services,” the minutes said.

Retail sales rose 3.8% in January in the US, surpassing estimates of 2.1%, according to a report released by the Commerce Department. The 0.6% gain in CPI for January aided the reversal from December’s 2.5% decline. CPI increased 7.5% YoY last month as well. Retail grew 3.3% excluding autos after declining 2.8% the month prior. Online shopping accounting for 14.5% of purchases. Furniture sales rose 7.2%, and vehicles and auto parts rose 5.7%. On an annual basis, retail sales rose 13% as the 33.4% rise in gas prices and 21.9% rise in apparel pushed prices to a high.

US Market Closings:

  • Dow declined 54.57 points or -0.16% to 34,934.27
  • S&P 500 advanced 3.94 points or 0.09% to 4,475.01
  • Nasdaq declined 15.66 points or -0.11% to 14,124.09
  • Russell 2000 advanced 55.67 points or 2.76% to 2,076.46


Canada Market Closings:

  • TSX Composite remained unchanged
  • TSX 60 declined 8.68 points or -0.67% to 1,294.37


Brazil Market Closing:

  • Bovespa advanced 352.77 points or 0.31% to 115,180.95


ENERGY:The oil markets had a green day today:• Crude Oil increased 2.15 USD/BBL or 2.34% to 94.2200• Brent increased 2.1 USD/BBL or 2.25% to 95.3800• Natural gas increased 0.278 USD/MMBtu or 6.46% to 4.5840• Gasoline increased 0.0241 USD/GAL or 0.90% to 2.6932• Heating oil increased 0.0213 USD/GAL or 0.74% to 2.8808The above data was collected around 12:40 EST on Wednesday• Top commodity gainers: Natural Gas (6.46%) and Lumber (3.49%), Platinum (3.33%), Aluminum (2.56%)• Top commodity losers: Rhodium (-1.36%), Bitumen (-2.62%), Palm Oil(-3.94%) and Cocoa (-2.10%)The above data was collected around 12:49 EST on Wednesday.BONDS: Japan 0.217%(+0.7bp), US 2’s 1.5393% (-0.04%), US 10’s 2.0382% (-0.52bps); US 30’s 2.3543% (-0.01%), Bunds 0.274% (-3.7bp), France 0.747% (-3.7bp), Italy 1.913% (-5.9bp), Turkey 20.83% (-2bp), Greece 2.662% (-5bp), Portugal 1.133% (-6.6bp); Spain 1.26% (-5.6bp) and UK Gilts 1.5210% (-6bp).