Yesterday, the yields of ten-year US Treasury securities fell by almost 4 bps to 1.70% per annum. Today they are growing and are about 1.72% per annum. US stock indexes moved down yesterday – at the end of the day, the S& P500 fell by 1.42%, the Dow Jones - by 0.49%, and the NASDAQ immediately lost 2.51%.
On Thursday, the global markets were dominated by negativity, although there were no particularly significant events yesterday. In the USA, moderately positive data on the producer price index were published. Thus, the price growth in December slowed down to 9.68% YoY against the background of upwardly revised data for November - a month earlier, the index grew by 9.81% YoY. The slowdown in producer price growth is primarily due to lower rates of growth in energy and food prices, and the indicator, excluding these factors, accelerated its growth. On the other hand, the weekly data published yesterday on applications for unemployment benefits turned out to be higher than expected. The number of applicants for the week increased by 23 thousand and amounted to 230 thousand. As a result, the indicator has updated the maximum since mid-November, the Bloomberg consensus forecast assumed a decrease in the number of requests to 200 thousand. Such data indicate the still insufficient recovery of the labor market, which so far limits the Fed in tightening monetary policy. Nevertheless, as Jerome Powell recently noted, the situation with rising prices is now a priority for the Fed, and yesterday's labor data did not cause a particularly strong reaction in the market. A number of macrostatistics will be published in the USA today. December data on industrial production and retail sales will give signals about the state of economic growth, and the January index of the University of Michigan will show consumer inflation expectations.
Yesterday, the tough statements of the Fed representatives continued. So, a member of the Fed Board of Governors Chris Waller yesterday allowed even 5 rate hikes this year if inflation is fixed at elevated levels. Nevertheless, emphasizing the high uncertainty, he noted that with a decrease in price pressure, the regulator may limit itself to two rate increases. In general, so far the basic scenario for the Fed is three rate hikes - yesterday Patrick Harker, Thomas Barkin and Charles Evans spoke in favor of such a scenario, also allowing for four rate hikes. As for the timing of the reduction of the Fed's balance sheet, it is still expected that this process will begin only by the end of the year. However, a number of representatives of the regulator are calling for an earlier start to reduce the balance sheet, which does not add to the positive market.
Yesterday, Brent crude futures exceeded the $85/bbl mark at the moment, but at the end of the day they fell by 0.24% to $84.47/bbl. There were no events that were fundamentally significant for the oil market yesterday, and quotes suspended their growth on weaker global demand for risky assets. Today, Brent futures are growing by 0.35% and are trading around $84.75/bbl. The traditional weekly data on the number of drilling rigs in the United States from Baker Hughes will be published tonight. The prospects for production growth in the US will have a moderately negative impact on quotes, but Brent futures still have the potential to grow above $85/ bbl.