Investors are anticipating the release of the US consumer price index data for November as well as the Federal Reserve's most recent economic forecasts on unemployment, gross domestic product, and inflation. Traders are looking for cues on where interest rates will settle later this year and when they might start to decline.
The Fed's main policy rate is expected to peak at around 5% in the spring and then decline in the second half of next year as inflation steadily returns to the central bank's objective of 2%, according to market predictions.
Chris stated, "We do feel that market consensus still underappreciates the risk of inflation lingering higher for a longer period of time and is also recklessly second-guessing the Fed in terms of [second half of 2023] rate decreases."
According to Turner, this week's events will determine whether investors start the new year focused on the prospect of inflation or the fear of a recession.
Despite falling more than 8% since September, the dollar increased on Monday versus a basket of six international counterparts, partly because to expectations that US inflation has peaked and China's tight zero-Covid policies have begun to loosen.
After rallying at the conclusion of the previous week, Chinese technology and real estate sectors led losses as Asian shares opened this week down.
The Hang Seng index in Hong Kong dropped 2.2%, the CSI 300 in China dropped 1.1%, and the Kospi in South Korea dropped 0.7%. Topix in Japan fell 0.2 percent.
While the Hang Seng Tech index shed 4.1 percent, the Hang Seng Mainland Properties index, which covers some of China's major developers, dropped 7.5%. A spinoff of China's largest real estate business, Country Garden Services, saw a loss of up to 17%, while search engine Baidu saw a loss of 7%.
The regional Stoxx 600 index for Europe down 0.6%, and the FTSE 100 index for London fell 0.4%.
Oil prices increased somewhat on Monday, reversing previous losses. Brent crude, the global oil standard, increased 2.5% to close at $77.99 per barrel, up slightly from its yearly low.
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