Week in a Glance: Carte Blanche from Central Banks, NFP & OPEC+

8 lis 2021

Markets have been waiting a long time for the past week as it could become the game changer that will reshape the financial markets landscape. Naturally, we are talking about the expectation of tightening of monetary policies by the leading central banks of the world.

Judging by the reaction of the stock markets, these results were perceived as carte blanche for further growth. Tellingly, now it is not at all clear what can stop this growth in principle. Because if the markets were growing amid expectations of tightening monetary policies, an energy crisis, a potential US default and actual defaults in the development sector in China, then how can they not grow when some of these problems or not, or have they diminished in scale?

So, the Federal Reserve Open Market Committee seemed to have started tapering, but did everything to make it clear that this is not any tightening of monetary policy and an increase in rates should not be expected, and in general, inflation is a temporary phenomenon.

The last hope of those expecting a tightening of monetary policies was in the person of the Bank of England, which, by the way, was the most aggressive of the Central Banks in words (some even expected the rate to rise on Thursday). Instead, they received assurances that inflation is a temporary phenomenon, which, moreover, is not controlled by the Bank of England, which means that it is not worth doing anything.

Since such results of the Central Bank meeting took place against the backdrop of one of the best reporting seasons in the United States in the last 10+ years, and the US labor market finally met the expectations of analysts, generating over 500K new jobs, there is nothing surprising in the growth of the US stock market. Greed in the markets goes off scale and once again we note that it is not clear what can reduce its level. Moreover, in the United States, legislators have finally adopted Biden's long-suffering infrastructure plan, that is, the economy will receive another trillion of money.

On the oil market, there is a start of a price correction, which is taking place against the background of an increase in oil reserves in the United States for the 6th week in a row, as well as the decision of OPEC + to continue to increase oil production: in December, the allies will add another 400K b / d to the current level of production.

After such a busy week, a respite is expected in fundamental terms. Reporting season ends. Central banks "shot". It remains only to follow the statistics, which, as we can see, no one cares about, but still. Inflation data from the US and China, as well as UK GDP and industrial production in the Eurozone will be released.