​ ​US

US equities retreated over the week as concerns over the economy and inflation re-emerged. Over the past 5 days ending Thursday, the 3 major indices were 1.78-3.49% lower. The correction in the market could be partially attributed to the reignited worries over the economy and labour market. 10 year treasury yields briefly fell as low as 3.4% as tensions over Ukraine went higher. However, at the time of writing, market base case expectations for the upcoming monetary policy path has remained largely unchanged, with Bloomberg interest rate futures suggesting that markets have priced in a 50 bps hike for the December meeting, and the terminal rate in 2023 would not be higher than 5%. US Fed officials entered the traditional blackout period this week ahead of the FOMC meeting next week, but economic data surprises continued to raise uncertainties over the monetary outlook.

As for the economic data, factory orders grew 1.0% MoM in October, which was better than both the market expected 0.7%, and the September figure of 0.3%. Labour market data on the other hand continued to cool down, as initial and continuing jobless claims figures continue to climb higher, which will remain a key matrix for markets to keep an eye as we close in to the Fed meeting. Next week, the US will continue to release the flurry of economic data, including the November data on retail sales advance and industrial production, as well as the much watched November CPI data. Preliminary data on December manufacturing and services PMIs will also be released, alongside the usual high frequency data of initial and continued jobless claims. The US Fed will also hold its FOMC meeting next week.

 ​Europe

European markets slipped lower over the week, the UK FTSE, French CAC, and German DAX lost 1.14-1.58% over the past 5 days ending Thursday. The war in Ukraine continued to bring uncertainty to the market, as Russian President Vladimir Putin warns that a nuclear escalation is possible. Cyprus Central Bank Governor Constantinos Herodotou sees interest rates close to neutral at the moment, but admitted that more hikes might be needed. Slovakian Central Bank Governor Peter Kažimír held a more hawkish stance, stating that a 10% inflation was still too high and shouldn’t warrant a slowdown in rate hikes. As for the economy, retail sales fell 2.7% YoY in October, which was worse than expected. German industrial production on the other hand was better than expected, only recording a slight fall of 0.1% MoM in October. Next week will be data heavy, Europe will be releasing preliminary PMI data on both manufacturing and services sectors for December, Germany will release the ZEW survey expectations and current conditions for December, and the UK will release the much anticipated CPI figures for November. Other than that, both the ECB and the BOE will hold their monetary meetings in the middle of the week

​China

On the back of improving policy outlook in China, both China and Hong Kong equity markets performed well over the week. The CSI 300 index is up 3.29%, while the Hang Seng Index continued the strong form and ended the week with a 6.56% gain. To further support the economy under pressure, the Chinese government has the ’new 10 rules’ aimed at easing COVID restrictions, including easing on testing, quarantine, and health code usage. The Politburo meeting also sent out signals of shifting away from the ‘dynamic zero’ policy. Furthermore, it was rumoured that China will roll out further support measures towards the property sector in the coming week. As for the economy, Caixin Services PMI for November came in at 46.74, which was lower than market expectations and remains in contraction. Exports fell 8.7% YoY ion November, which was the largest fall since March 2020 and marks the first drop in over 2 years. PPI extends the fall at 1.3% YoY in November, and CPI remains under control at 1.6% YoY. Next week, China will also be releasing other economic data for November, including industrial production, property sales, retail sales, and fixed asset investments.