Today the economic calendar is quite loaded with events. Japan started off the day with positive reports on the trade balance and December machinery orders. Then came a new car registrations reading from the European Union, which was at -24%, much worse than the previous report.
The United Kingdom published its latest inflation rate reports today, which were all better than the forecasts. The positive inflation data for January will likely fuel the rally of the risk-friendly pound even further.
Canada will offer its own inflation data later today, while the United States will publish reports on retail sales and industrial production, among others, plus the minutes from the most recent Federal Reserve policy meeting.
Meanwhile, the markets also remain optimistic about the coronavirus pandemic, as daily infection rates globally have fallen to their lowest level since the fall. The total number of cases has surpassed 110 million worldwide. Of those, 28.3 million have been in the United States, 10.9 million in India, and 9.9 million in Brazil.
The Arctic cold wave sweeping through North America is a much more pressing concern for the markets at the moment. Texas continues to be offline, with millions of people cut off from power due to the extreme weather. Oil prices are increasing in light of the United States’ inability to produce oil at the moment, at least in Texas. The Brent climbed to $64.06 today, while the WTI reached $60.94 per barrel.
Furthermore, the yield curve on US Treasury bonds continues to get steeper due to reassurances from US President Joe Biden about increased government spending. This is also pushing the dollar index higher today.
Though there is moderate risk appetite among investors today, US stock indices will correct downward on Wednesday in a break from their recent rally. This is most likely just a temporary adjustment.
