From Marc to Market:
Overview: Anxiety is running high. Rather than ease its Covid restrictions, a surge in cases is seeing more areas in China come under restrictions. The US reports CPI and of the ten reports this year, seven of them have been stronger than expected. The turmoil in the crypto space has gotten noticed even by those not involved. Asia Pacific bourses fell, led by Hong Kong, and Europe’s Stoxx 600 is off for a second day. US equity futures are slightly firmer. US and European 10-year benchmark yields are 2-3 basis points higher. That puts the US Treasury yield near 4.11%. The US dollar is trading higher against all the major currencies but sterling. Emerging market currencies are also weakening against the dollar.
Gold is little changed as it hovers above $1700. Demand concerns and a stronger than expected rise in US inventories have extended the retreat in December WTI. It is off for the fourth consecutive session and near $85 it is at its lowest level in more than two weeks. US natgas is heavy after losing 11.6% on Tuesday and nearly 4.5% yesterday. Europe’s natgas benchmark is recouping half of yesterday’s 5.5% decline. Concerns about the impact of the surge in China’s Covid cases has ended the seven-day rally in iron ore prices. December copper is off 1.6% after bouncing about 2.6% over the past two sessions. The USDA lifted its global wheat consumption estimates yesterday and this may be helping steady December wheat after declining nearly 5% in the first three sessions this week.Asia PacificAt the end of last week, the buzz was about China moving away from its zero-Covid policy. Today, some of the risk-off activity is being linked to new Covid restrictions in some of China's largest cities. Guangzhou, a large manufacturing center has the most significant outbreak. Some fear that it will be locked down like Shanghai was for a couple of months earlier this year. Chongqing, a megacity, has seen the number of cases jump from single digit at the start of November to over 750 yesterday. Schools and non-essential businesses in some districts are closed. Beijing's cases are the highest in five months, and reports suggests cases are being found outside of the quarantine, which means the virus is still spreading. The lockdown in Zhengzhou has ended in general, the district that houses the largest iPhone factory will continue to face strict curbs....
