Governor of BoJ Reiterated that He Will Not Change Long-term Monetary Easing Policy.
Market Summary
With little new macro data out last week, investors focused on the impact on China as well as global markets as the Chinese government continues to relax its Covid policies. The CSI 300 Index rose 1.13% for the week, reversing previous declines.
In the United States, the real estate sector was hit by interest rate hikes, with pending home sales falling for the sixth consecutive month in November to the second lowest level on record. The manufacturing sector rebounded, with the Richmond Fed’s index of manufacturing activity rising to a higher-than-expected 16 in December. In Europe, central bank policy makers said they would insist on all necessary measures to keep inflation at the 2% target, with the terminal rate expected to rise above 3%. UK house prices contracted for the fourth consecutive month, falling 0.1% month-over-month.
In Asia, the Governor of the Bank of Japan reiterated that he does not intend to change the long-term monetary easing policy. Industrial output fell 0.1% in November from the previous month, the third consecutive monthly decline. The Chinese government continued to scrap quarantine measures and stopped releasing daily coronavirus statistics. There are signs that many cities are experiencing peak infection and economic activity has recovered.
Major News
Many countries, including the US, Japan, India and Italy, have announced the latest measures for Chinese tourists entering the country, such as the requirement for inbound tourists to provide negative Covid-19 tests.
As Joe Biden's large-scale government investments will slow the recession of the real economy, the U.S. economy can still potentially achieve a "soft landing", said by a senior adviser of the White House.
Goldman Sachs CEO said layoffs will be made in January, and the cuts may affect 8% of the workforce.
South Korea's chip production fell for the fourth consecutive month in November, down 15% year-on-year, as demand for electronics was hit by inflation.
What Caught Our Attention
The ability of authorities to track Covid-19 spread is diminishing as at-home testing gradually replaces mass testing. However, some indirect signals may hint at the scale of covid spread.
Nick Beauchamp, of Northeastern University, in Massachusetts, found that negative reviews of the scented candle brand Yankee Candle on Amazon increased rapidly around December 2021, which coincided with the point at which the Omicron variant of the virus began spreading widely in the US. And Covid-19 can cause patients to lose their sense of smell. If Mr Beauchamp's study is correct, the current number of cases may be higher than the official figure.
Similar studies are pushing researchers to use Internet data to track public health, and statistical models can warn people of a possible future wave of infections, but of course these studies are in the early stages.
Source: Kredens Capital, Bloomberg, Financial Times, Economist
