Market Update

From the table provided, it's evident that global equity markets had a promising kick-off to 2023.
The minutes from the recent Fed monetary policy gathering on 14 December 2022 conveyed a somewhat hawkish sentiment. Policymakers seem to counter our perspective that due to the decelerating economic momentum, there might be a cut in US interest rates later this year. Yet, it's worth mentioning that asserting the need for elevated rates may be straightforward for Fed officials currently, but upholding such a stance might become challenging if the US economy indeed starts to wane.
Today's (6 January 2023) US non-farm payroll figures indicate a resilient US job market, with payroll figures slightly surpassing anticipations at 223,000, though the numbers from November experienced a minor downward adjustment.
Moreover, the wage inflation was less than projected at 4.6%, a decline from 5.1%, and the prior month's figures also faced a downward revision. This can be interpreted as a signal that the employment market's intensity might be relaxing.
In other developments, December witnessed a 1.8% decline in US factory orders. The ISM index reported 49.6, which significantly trails both the prior month's 56.5 and the forecasted 55.0. Considering 50 is the benchmark differentiating growth and shrinkage, this number hints at a potential recession in the US economy. This could mean the zenith of US interest rates might be nearer than what Fed officials currently anticipate.
In European updates, the headline CPI inflation for the Eurozone decelerated more than market projections, moving from 10.1% in November to 9.2% in December. This was primarily influenced by the drop in energy costs.