global market: five global market themes for the coming week

Rising geopolitical tensions in Central and Eastern Europe and rising gas prices are expected to keep markets on their toes over the coming week.

U.S. buyers are bracing for Black Friday, while investors will analyze inflation data and Fed minutes for clues about the impact of price pressures on interest rates. And how far do Kiwi prices fly?

1. HOT AND COLD BREATH


Relations between Russia and the West are at their peak since the Cold War since the Cold War – but could they get hot? Russian Vladimir Putin says the West does not listen to the “red lines” and warns against the deployment of NATO infrastructure in Ukraine. Russian troop movements across Ukraine’s borders prompted NATO to warn that it was standing by Kiev’s side.

Ukrainian bond prices have fallen, Moscow markets are waking up to new risks, Poland and Hungary have seen their currencies and stocks fall sharply. But much of the conflict is in natural gas markets, where a 350% price hike this year will boost inflation and hurt growth.

Markets are also wary of escalating tensions around Russia’s $ 11 billion Nordstream 2 pipeline, which is opposed by the United States and Ukraine, backed by Germany. A suspension of certification has facilitated the flow of Russian gas to Europe, pushing prices back to 100 euros per megawatt hour.

2. Uneven BREAKEVENCE


The minutes of the Federal Reserve’s meeting in November should give some clues as to its stance on inflation.

U.S. consumer prices, which rose at the fastest pace in more than three decades in October, and accelerating inflation expectations have raised hopes that the Fed will need to accelerate the reduction in asset purchases and raise prices. interest rate faster than expected.

The 5- and 10-year breakeven yields – the spread between normal and inflation-protected government bonds – are at record levels. Wednesday’s reading of the Personal Consumer Price Index (PCE) – the Fed’s preferred inflation indicator – is expected to rise to 0.4% according to a Reuters poll.

3. DETAIL RODEO


Black Friday kicks off the biggest shopping season for the Christmas holidays, and the news has been mostly good for retailers in recent months as a reopening of the United States with the vaccine sent customers back to stores.

This was reflected in retail stocks: the S&P 500 exchange-traded fund (XRT.P) rose 15% this quarter, compared to a 9% increase for the S&P 500. Growth in consumer discretionary – y including many retailers – reached 14.5% from 8% in early October, according to Refinitive data.

But bottlenecks in global supply chains, which are reducing inventory and driving up prices, remain a concern: Walmart shares (WMT.N) fell after high labor costs work and supply chain have eroded margins.

Rising inflation is also causing markets to fear that consumers are tightening their belts. But the latest retail sales figures made it easier to read, showing sales increased in October as Americans started shopping early to overcome supply shortages.

4. GROWTH VS COVID


The Flash Purchasing Managers Index for November (PMI), an important forward-looking economic indicator, comes from a wide range of major economies in the coming days – the United States, Australia, the United Kingdom and the United Kingdom. eurozone.

The market is focusing on the impact of price pressure and supply bottlenecks on business activity, and their reduction. Eurozone PMIs, which have held up well, could give some idea of ​​the toll of a COVID-19 resurgence.

Germany’s Angela Merkel warns that the coronavirus situation in the plant’s economy is dire, the Netherlands is partially stranded and pressure is mounting on Austria to do more. But the vaccine rollout and the reassuring – and potent – presence of ECB stimulation alleviate some of those concerns.

5. A NOT SO FLY-FREE KIWI


The Reserve Bank of New Zealand is expected to sink further into the vanguard of inflation fighters on Wednesday, delivering another rate hike in as many months.

Since October, when the RBNZ joined Norway as the first migrants from developed markets, inflation has peaked a decade and unemployment has fallen to record levels.

Traders are convinced that interest rates will rise and focus on two hawkish risks: An approx. 40% chance that the increase will be 50bp and that the bank will lift its long-term interest rate outlook. ,

Both could push the kiwifruit higher, although both pose risks to local borrowers, who have already been pressured by the fastest rate hikes in 15 years.