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Market relieved as CPI meets expectations 

US November CPI +6.8 percent y/y vs +6.8 percent expected 

US, U Mich December consumer mood 70.4 vs 67.1 predicted. Biden believes inflation has peaked The November budget deficit in the United States was $191 billion, compared to the $195 billion predicted. Baker Hughes oil rigs increased by 4 this week to 471. 

The most recent South African covid figures provide grounds for optimism. Omicron is being used to indicate vaccination immune escape in the United Kingdom. According to Canada, all 87 verified omicron instances have been mild or asymptomatic. UK Government Spokesperson: Some progress has been made on the Northern Ireland Protocol.

Markets:

Gold up $7 to $1781 • US 10-year rates unchanged at 1.487 percent • WTI crude up $1.07 to $72.02 • S&P 500 up 43 points to 4710 – a new high • GBP leads, CAD lags

The market was on edge ahead of the US CPI announcement, with some seeing Biden’s comments on Thursday as a foreshadowing of a high CPI figure. Instead, the figures were consistent with the consensus. This resulted in a collective sigh of relief, notably in equities. 

The US dollar plummeted in the early reaction as well, dropping approximately 30-40 pips across the board. Much of it was reversed in the next hour, but new dollar selling began as the 

UK

London session came to a close, notably in GBP. The S&P index closes at a new record level.

The S&P index is closing at a new record high. The index is surpassing the November 18 high close at 4704.55. The index closed at 4712.01. The S&P index also had its best week since February. The index rose 3.84%

• The Dow industrial average is closing -1.27% from its all-time high close. The Dow industrial average had its best weekly gain since March. The index rose 4.03% this week
• The NASDAQ index is -2.66% away from its all-time high close. For the NASDAQ index it rose 3.6% this week
• Dow industrial average rose 216.30 points or 0.6% at 35970.98
• S&P index rose 44.57 points or 0.95% at 4712.01
• NASDAQ index rose 113.24 points or 0.73% at 15630.61

The most recent South African covid figures provide grounds for optimism. 

As the globe monitors the epidemic in South Africa, the country has recently released its most recent covid statistics. 

The country completed 83,515 tests, the most in the latest outbreak. Despite this, the number of cases dropped to 19,018 from 22,391 the day before, when 75,251 tests were given. In another measure, the optimism rate dropped from 29.8 percent to 22.8 percent. 

Cases are up 64% from a week ago, which is substantially less than the prior doubling. Now, testing and protocols play a role, but when paired with reports that covid wards aren’t being overburdened there or in Botswana, there’s reason to be optimistic. 

The assessment of neighboring provinces is much more positive. Limpopo, to the north, has 890 cases today, up from 500 a week ago. Mpumalanga is at 953 compared to 662 a week ago, North West is at 1183 compared to 805 and Free State is at 915 compared to 296.

• The price has dropped roughly 563 pips since high, ending a five-week losing trend for the AUDUSD. 
• The AUDUSD will end a 5-week losing skid. Since peaking on October 28 at 0.7555, the price has fallen to a low of 0.6992 on Friday. That move resulted in 563 pips from high to low. This week’s low was 0.69935, which was somewhat higher than the previous week’s low. The inability to go lower gave purchasers the green light to correct upward. This week, the price rose to a high of 0.7186 on Thursday, for a 193-pip trading range.

• On the initial look, sellers leaned against the moving average level. Getting above it next week, as well as the 100 week moving average around 0.7207 (which is also 38.2 percent of the fall down from the last cycle high), would strengthen the positive tilt. Buyers aren’t gaining unless prices rise above those levels. The 563 pip move lower corrective is simply a “basic vanilla” variation.

USA

Biden believes inflation has peaked. 

• Assuming he’s referring to the rate of inflation, he’s not insane to say that. 

The December reduction in energy prices bakes in a slowdown next month, provided oil does not tear back higher in the coming days. There is also an indication that supply networks are loosening up. Furthermore, the base effects begin to operate against inflation in a matter of months. However, rising rents, property prices, and travel expenses aren’t going away. 

Wages are the X-factor, and determining them is difficult. 

There is a lot of panics out there, but we’ve been in a long-term deflationary climate, and the reasons driving globalization and automation haven’t changed. • Immigration will shortly resume, putting a damper on earnings. The bond market does not believe inflation will remain around 6.8 percent for long.