GLOBAL MARKETS RESEARCH

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There’s a lot of positive sentiment around this morning. Equities are rising sharply in the US and Europe, oil is up and bond yields are rising.

Markets continue to travel with optimism that Omicron will not have the severity of prior variants in terms of health outcomes, even if it is more transmissible.

Markets might be right on the interest rate outlook.

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Markets continue to travel with optimism that Omicron will not have the severity of prior variants in terms of health outcomes, even if it is more transmissible.

Markets might be right on the interest rate outlook.

Positive Omicron reports coming from South Africa alongside an encouraging preliminary assessment from Dr Fauci over the weekend boosted sentiment with overnight news of policy easing in China, an additional bonus.

As we start a new week, Omicron headlines were positive on Saturday which may add to some stabilisation in risk sentiment.

Risk sentiment recovered overnight with virus/vaccine news flow being net positive

The US CDC has just identified the first case of Omicron in the United States – joining the UK, Switzerland and Brazil overnight – at a time when US infection rates of the delta variant had already started creeping back up.

The overwhelming negative influence late in the month was the emergence of the Omicron covid-19 variant and doubts over the efficacy of existing vaccines against this strain and all that might imply for the global economic re-opening process.

NAB expects that the RBA will raise rates from mid-2023 with a relatively aggressive series of hikes thereafter.

It has been a volatile session overnight driven by differing headlines around vaccine efficacy, capped off by very significant hawkish tilt by US Fed Chair Powell in Senate Testimony.

Global markets have seen a modest retracement of many of last Friday’s violent ‘risk-off’ moves, with equities higher in Europe, so too US government yields up, as too is oil, but in all cases to nowhere near Friday’s closing levels.

Omicron uncertainty triggers a rethink on the global economic outlook

BoE’s Bailey still guiding that rates will need to be higher ahead of the Dec MPC meet.

Dovish Fed Official (Daly) flips to looking at accelerating tapering and to hikes in 2022

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