Murat Aslan
07 January 2022•Update: 07 January 2022
ISTANBUL
As increasing volatility due to the US Federal Reserves (Fed) hawkish approach slackens, global markets focus on unemployment figures.
Expectations related to the Fed's monetary policy continue to have impact on asset prices.
After Fed's hawkish statements on Wednesday signaling for an early interest rate hike, global stock markets posted declines. However, verbal directions of Fed officials relieved markets.
St. Louis Fed chair James Bullard said the interest rate can be increased in March and fewer than three interest rate hikes would be enough for 2022.
Mary Daly, the chair of San Francisco Fed, said shrinking balance sheets and asset purchases are completely different. The Fed should leave its balance sheet steps until after the interest rate hike, she added.
Analysts stated that the possibility that Fed may begin to narrow its balance sheet at the same time with interest rate hikes has increased the uncertainty in the markets. The official explanations on the subject were effective in reducing volatility.
Noting that the expectations for the Fed's rate hike have continued to change since the beginning of the week, analysts said the markets expect a 20 basis point rate hike in March with an 80% probability.
Analysts stated that the non-farm employment, unemployment rate and average hourly earnings data in the employment report to be published Friday came to the fore due to the effect of the Fed's monetary policy, while the verbal guidance of the Fed officials was also placed in the focus of the investors.
The US 10-year Treasury yield stabilized at 1.72% on Thursday after hitting 1.75%, the highest level since April 2021.
The ounce price of gold, suppressed by the Fed, is trading just above $1,790, which analysts highlighted as important support level.
On Thursday, the US, European and Asian markets closed the day mostly in red.
In the EU side, the inflation rate exceeded expectations in Germany by reaching 5.1% annually on Thursday.
On Friday, Germany will release industrial production figures, while the union will share preliminary inflation figures.
In Asia, Japan's inflation rate 0.8% also surpassed forecasts.
Turkiye's BIST 100 index gained 0.11% in value on Thursday's close to reach 2,007.55 points.
* Writing by Gokhan Ergocun
