Hawkish Fed surprises market

Today's news headlines: 

‘Treasury rout deepens as Fed opens door to aggressive tightening’. US 10-year Treasury yields are set for their steepest weekly increase since June 2020 as investors price in the risk that the Federal Reserve raises interest rates faster than expected. Recent meeting minutes suggested the Fed may take a more aggressive approach than the previous rate-hike cycle by shrinking their balance sheet soon after their first rate hike. (Bloomberg)

‘North-South divide emerges as UK electric vehicle sales hit record high’. Concerns are mounting that Britain’s road infrastructure is a major barrier in the nationwide shift to greener vehicles. More electric cars were registered in the UK last year than in the entire five preceding years, with London and the South-East outpacing Northern England resulting in more charging ports in these areas. A widening North-South divide also risks hampering Prime Minister Boris Johnson’s commitment to narrow regional divides. (Financial Times)


US and European equity futures extended a global equity sell-off led by Tech shares after the Fed signalled rate hikes could be more aggressive than previously expected. Sovereign yields extended their climb along with the US Dollar while commodity-linked currencies slipped.


Caixin Chinese Services Purchasing Managers’ Index (Dec): 53.1 (est. 51.7)
German Factory Orders (Nov): 3.7% (est. 2.3%)
Markit UK Services/Composite PMIs (Dec): 9:30AM
German Consumer Price Index YoY (Dec): 1:00PM
US Initial Jobless Claims (1st Jan): 1:30PM
US Factory Orders and Durable Goods Orders (Nov): 3:00PM
Japanese CPI YoY (Dec): 11:30PM

Interbank rates:

GBP/USD – 1.3510
GBP/EUR – 1.1958
EUR/USD – 1.1298
USD/CAD – 1.2796

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