What is happening in the markets is quite unusual: equity markets surged upwards in Europe yesterday before a sharp fall in US indices and relative stability in Asian markets overall. Pessimism prevailed in the US after the first (seemingly inevitable) case of the Omicron variant infection in California and the Fed Chairman’s hawkish statements before the House of Representatives this time. The US 10-year yield plunged to its lowest level since September (1.4%) while the S&P 500 lost 1.2% and the VIX rose above 30 for the first time since January.
However, the information on the new variant is alternately alarmist and reassuring. The WHO believes that vaccines should continue to be effective against severe forms of the disease. Uncertainty and high volatility are likely to prevail as long as studies have not decided on the effectiveness of the vaccines and the danger of Omicron.
Today, we will be watching producer prices in the euro zone (up almost 20% yoy) and jobless claims in the US. They had fallen to their lowest level since 1969 last week. The EUR/USD exchange rate is stable at just above 1.13.
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