Erratic market movements

Asian equity markets have initiated a rebound that could continue in Europe and the US. Long-term rates are also slightly higher, with the US 10-year rate back above 1.4%. The dollar is fairly stable; the EUR/USD exchange rate is trading around 1.1280.

The factors explaining this rebound are the same as those that pulled the markets down yesterday. They therefore appear very fragile. Regarding Omicron, Moderna announced that a 3rd dose significantly improves the chances of patients avoiding a severe form of the disease. Didn’t we already know that? In the US, Senator Manchin and President Biden have been talking, raising hopes of an agreement on the $1750bn plan. Finally, the Chinese authorities have apparently started selling yuan to increase foreign exchange reserves and bank liquidity.

The economic agenda of the day does not offer anything more exciting than yesterday: to be followed, however, are the CBI retail survey in the UK and the first estimate of the consumer confidence index in the euro zone in December, which is logically expected to fall sharply.

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