Market Update

This week's data revealed the U.S. is experiencing the highest inflation rate in nearly four decades, clocking in at 7.0%—a rate not seen since June 1982.
Interestingly, Jay Powell, the Fed Chair, aimed to allay fears that the Fed might stifle the ongoing economic recovery with excessive rate hikes. During his nomination hearing earlier this week, he emphasized the importance of preventing entrenched inflation while safeguarding the economy, especially the job market.
This sentiment is encouraging, especially in light of today's (14 January 2022) data. US retail sales dropped by 1.9% in December, and the University of Michigan's consumer sentiment index reflected diminished confidence for both the present and future. Furthermore, the Beige Book's assessment from Wednesday (12 January 2022) shifted its perspective on the economic recovery from "moderate" to "modest," indicating potential deceleration in the US economic revival. We hope this will caution the Fed against hasty interest rate hikes, particularly as we anticipate inflationary pressures will diminish in the upcoming months due to the easing of supply-chain disruptions and bottlenecks.
As we turn our gaze to the upcoming week, while U.S. markets will remain closed on Monday (17 January 2022) in observance of Martin Luther King Day, a slew of vital data is set to be released. This includes the Empire State manufacturing survey, UK employment statistics (including unemployment rate and weekly earnings), CPI inflation data from the UK, Eurozone, and Japan, retail sales figures from the UK and China, Chinese industrial production, China's Q4 GDP, and the Philadelphia Fed business outlook survey.