Red-hot Inflation Data Failed To Spook Investors

Updated time: 14 Jan, 2022, 11:37 (UTC+04:00)

Inflation report was out, proving that a red-hot 7% increase in inflation, hitting the fastest pace in decade, was in line with market forecasts. Bonus the less hawkish monetary policy, it failed to spook investors actually, following with indexes closing higher about 0.1-0.3% and a rebound in tech and growth stocks.

If looking deeper into the report, we would see that the 0.6% rise in December’s headline CPI was just slightly above the expectations and sticker areas of price pressures rose less than expected. This raised early hopes that inflation may cool in months ahead. Though the Fed still kept their rate hikes plan and stressed central banks to do the same, tech and growth stocks cheered with great earnings.

Stocks:

Alphabet is the biggest gainer in the tech sector, except for Meta.

Tesla jumped above 4% after Morgan Stanley upgraded its price to $1,300/share.

Other sectors like healthcare, slid.

Commodities:

Energy was flat though oil prices neared two-month highs after a big draw of crude oil inventories. However, many still believed in the bullish crude oil price in 2022 that may reach the target of $85-90/ barrel.

Gold longs won again – above $1,800 accelerated by the retreat of 10-year Treasury bond yields and the dollar. Bets on the yellow metal touting the elevated inflation may raise its price to $1,840.

Cryptocurrencies: price rose better-than-expected like the stock market.

Bitcoin marked the highest price in the week of $43,657 while Ethereum reached $3,342. It was attributed to the reason that investors believed the coin would hedge the current high inflation like gold. However, some predicted and feared that the price would climb higher and trigger the Fed to rethink about tightening monetary policies to cool down the economy.