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Below are Views On Daily Global Market Update 04 January 2022 By Asheesh Chanda, Kristal.AI

Risk On

Equities traded up in almost all markets that were open, as 2022 officially kicked off. The SPX got back close to the 4800 level despite only half the index constituents gaining on the day. Gains came from the Energy and Consumer Discretionary sectors with Financials and Tech playing a supporting role. Apple became the first company in the world to touch USD 3 tn in market cap - taking 42 years to reach USD 1tn and less than 3 years to triple that. It currently makes up 7% of the SPX. Japan, Australia and the UK will start trading today as well.

The US yield curve went higher and steeper with the 10Y gaining about 10 bps to trade above the 1.6% level. The 2Y briefly hit 80 bps, its highest since March 2020. Price action here is being attributed to hawkish central bank expectations and improving sentiment. US breakeven yields also rose by a similar amount with the 5Y inflation expectations topping 3%. The US dollar was up against most currencies and FX vol traded up in the shorter tenors as well.

Crude stayed rangebound ahead of the planned supply increase of 400k bpd coming from OPEC+ today. Gold fell back to the 1800 level again after briefly threatening to break higher. Crypto continued to trade sideways and 2021 saw the slowest pace of gains here since 2015, a sign of a maturing asset class. Ahead today we have manufacturing PMIs from across the globe and the RBA is expect to hold in 2022's first rate decision.”

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