US yields firmer in the open of 2022 business

  • US yields are firm at the start of 2022, focusing on US events. 
  • The FOMC, ISM and NFP will be critical events for the start of the year.

The yield of the US 2-year Treasury note is up over 1% while the 10-year is higher by 13% at the time of writing. This follows the end of year’s slump as investors moved out of stocks in the last trading days before the New year celebrations. 

Key US data for the month ahead

The week starts off with major trading hubs, such as Sydney and Tokyo as well as London out in observation of New year’s day. However, the US markets will and there will be a focus on critical events o the calendar. December jobs report January 7 will be key this week as will the minutes of the recent Federal Reserve meeting. Later in the month, the US Consumer Price Index data will be out on January 12, followed by PPI data on January 13, and Retail Sales on January 14. There will be a small two-week window for Fed speaking engagements in early January, as the media blackout for the January 25-26 FOMC meeting takes effect at midnight January 14.  The Beige Book for that meeting will be released on January 12.   

Meanwhile, the main event for the week ahead will be in the form of the US jobs market with the US Nonfarm Payrolls report. ”The late-December COVID surge likely came too late to prevent a pickup in US payrolls after the gain in November (210k) appeared to be held down by an overly aggressive seasonal factor,” analysts at TD Securities explained.

US ISMs on the 4th will also be key. The levels should remain high according to analysts at TD securities. ”We expect the services index to decline more markedly following November’s eye-popping jump to 69.1—an all-time high—and given the likely initial impact from Omicron. The MFG index probably fell below the 60 mark for the first time in four months. Anything over 60 is exceptionally strong.”

Federal Open Market Committee minutes will also be key. The minutes follow the FOMC’s decision to double the pace of QE tapering and the projection of a significantly more hawkish dot plot will be the focus before then. ”Focus will now turn to the elements that led to the evolution of views among policymakers (including on “maximum

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