Omicron and inflation

There was little change in the financial markets last week. Equity markets ended the year near their highs, long rates continued their very slow rise and the euro strengthened slightly against the dollar. So despite the uncertainty and risks surrounding the Omicron variant, it seems that optimism continues to prevail.

Very few economic indicators were released: US jobless claims fell back below 200k and China’s PMIs were virtually unchanged in December. It seems that the economic theories of the Turkish President are being challenged by the inflation figures: 36% in December, “despite” the interest rate cut. A direct consequence of the collapse of the currency.

Manufacturing PMIs will be published today: they could be revised downwards from their first estimate due to the impact of Omicron.