Week in a Glance: Omicron, Powell, NFP and OPEC

6 Des 2021

All last week, the markets have been buzzing with one thought - her name is omicron. Will it be more contagious? Will a more severe course of the disease bring? Will the vaccine and immune defense cope with it? The future of financial markets largely depends on the answers to these questions.

Judging by the dynamics of prices for risky assets (sales): stock markets, cryptocurrency markets, commodity markets - the markets did not like the current version of the answers. Indeed, the omicron is rapidly scattering around the world (more than 40 countries have already recorded its presence on their territory). It is more contagious (in South Africa, the weekly growth rate of cases due to the new strain exceeded 400%). According to preliminary data, omicron has an increased ability to undergo immune defenses compared to previous versions of the virus.

In general, so far everything is extremely bad. The only thing missing to a complete picture is the more severe form of the course and the higher mortality rate. But we will get this data only by the end of the coming week or even next.

Fed chairman Jerome Powell added fuel to the fire, speaking in Congress, he made a number of quite sensational statements regarding the future of monetary policy in the United States. In particular, we are talking about his announcement of a revision of the rate of reduction of the quantitative easing program towards acceleration in December, as well as about his recognition of the fact that inflation in the United States is not a temporary phenomenon. That is, it is obvious that the rate hike will take place much earlier than the markets expected.

Another unpleasant surprise for buyers on the US stock market was presented by the data on the US labor market: the figures for NPP came out 2 times worse than forecasted.

The oil market was pretty depressing last week. The reasons are obvious - with the prospects for demand, everything is not very good in light of the new wave of the pandemic in Europe and the prospects for a worsening situation in the world due to the omicron. With the proposal, on the contrary, in the short term, everything looks optimistic: on the one hand, the countries are preparing to sell off strategic reserves, and on the other, OPEC + did not take any countermeasures last week and, on the contrary, increased pressure on oil quotes, deciding to increase production by 400K from January. b / d. In general, the fundamental background for oil is extremely toxic, even despite its strong decline over the last month.