🗝Markets in Review🔦

⏳An Expected Mover➡️

Equity market had a robust rebound on Wednesday, despite a hawkish Fed. The gain is a reflection of what the market had expected; thus removing an overhang that has hit the equity market for the past weeks. 

This gives the relief as investors are relief on Fed’s estimate of a strong growing economy despite less monetary support. At least, inflation can be tame, while growth is still likely to remain firm in 2022.

🏋The Bond Market Story💎

A positive note to the equity market is the bond market which saw the 10-year Treasury yield rising to 1.46% from the day low of 1.44%. We could see the prices of these treasury to continue its slide as the Fed buys less bonds. 

We had observed short term yield on the 2-year Treasury yield rising more sharply to 0.715 form a low of 0.66% before closing lower at 0.65%.

🏒Where’s the greener Pasture?🪜

The flattening of the yield curve hint on market participants expectation of a weaker growth ahead. And this means more market participants may move to more defensive sector such as the ETF of VDC and XLU in the consumer staples and utilities sector respectively. 

The Fed may also review the latest economic data too given yesterday retail sales rose only 0.3% in November, which is a missed of forecast for 0.8%. A flip story is that consumers are shopping earlier thus pushing October figure and thus a less robust Nov figure. 

We hope the sky is clearer for the leap forward for the equity market and a possible recovery of our portfolio. 

Pika World wishes everyone a profitable trading week ahead and great health!