Monday's Market Minute: Beginning 2022

With the U.K., Japan, China, and Canada closed for a holiday this Monday morning, it could be kind of a slow start to begin the year. However, we do have a couple of focal points for investors and traders to begin the week and the year. First, U.S. indices remain at or near all-time highs: the S&P 500 closed out the year up almost 27%, with the Nasdaq-100 up around 21%. This is a sign investors feel pretty comfortable with rates at current levels – the TNX is set to begin the year around 1.50%, in the middle of a range it’s been in for the last year.

The trend up in stocks and stock index futures last year is a vote of confidence in Jerome Powell, his ability to navigate murky waters ahead, and how investors have managed to focus on the positive (companies reporting better-than-expected quarterly results and better-than-expected economic data) while shrugging off the negative (COVID concerns). Next, crude is on the move higher with the risk-on sentiment and ahead of the OPEC+ meeting this week; expectations are for them to increase production by 400K.

Gold is also bid as geopolitical tensions in Russia have supported prices back above $1,800. Lastly, U.S. Dollar futures should be watched as they’ve struggled to take out key resistance up around 97.00 – now trading to the lower extreme of the middle of the range they’ve been in since mid-November. In terms of economic data this week, primary focus will be on the jobs report Friday, but we also have the FOMC minutes due out Wednesday, some manufacturing data throughout the week, and a handful of Fed speakers who could provide insight as to where they stand headed into the first policy meeting of the year. I think there will be a fair amount of attention on rates this month as speculation has been building that the Fed will be forced to act sooner rather than later to combat inflation.

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