Market Commentary 2022

19th January 2022

UK inflation jumps to highest level in 30 years

The inflation rate for the UK jumped to 5.4 per cent in December, its highest rate in 30 years. The result of this is heightening a cost of living crisis and squeezing household incomes. The large annual rise in the consumer price index reflected widespread increases in the cost of most goods and services and again exceeded economists' forecasts of a small rise in December to 5.2 per cent from 5.1 per cent in November. Analyst's expectations for spring levels of inflation is to push even higher, in excess of 6 per cent, with gas and electricity prices being a large contributor to this. All of this is putting ever more pressure on the Bank of England to raise interest rates, who, having failed to anticipate the surge in inflation, now have a problem. They face pressure to raise interest rates to cool spending and bring inflation down towards its 2 per cent target, but does not want to squeeze household budgets too far and undermine the recovery.

14th January 2022

UK GDP returns to pre pandemic levels

GDP in the UK has come in above economists` expectations at 0.9% in November 2021, well ahead of the consensus 0.4% figure. This leaves the UK economy larger than before the Pandemic in the month just before the Omicron variant begun to sweep through the nation. Factors at play were early spending in the lead up to Christmas and increased spending on restaurant bookings. Production, Services and Construction all saw growth in the period, and notably Construction had recovered from a long string of lacklustre months dating back to April 2021. It is expected that due to restrictions surrounding the Omicron variant that were introduced, December's figure will be more muted. Markets remain stable in wake of the release, despite this milestone being reached.

12th January 2022

US inflation at levels not seen since the 80’s

US consumer price inflation for the month of December has reached a level not seen in over 40 years with year on year inflation reaching 7% and month on month inflation hitting 0.5%. Despite these large increases the December increase of 0.5% was down from 0.8% the previous month and the yearly figure of 7% was in line with market expectations which caused little to no ripple through global stock markets. The Nasdaq actually found some strength amid the growth sell off which has griped this market. This number firmly puts the chances of a US hike in March on the cards with markets having largely priced in this hike already.

7th January 2022

US employment approaches pre pandemic levels

Markets continued their decent today with tech taking the brunt of the losses as US job data for December showed unemployment rate in the US at 3.9% which is just below the 3.5% pre pandemic unemployment level. Rises in hourly earnings also painted a positive picture of the labour market in the US. The market has seen this as evidence the FED now have all the reasons they need to raise rates sooner than the market expects with investors starting to price in a rise as soon as March. This move has prompted weakness in both US growth stocks and treasuries.