While the positive financial market atmosphere continues, the Fed's pace of interest rate hikes and the prospect of fundamental following the transition to China's With Corona are raising expectations for recovery.
According to an analyst at Hana Securities, in the case of the U.S. Consumer Price Index (CPI), the service price burden continued, but the market paid more attention to the negative (-0.1%) increase from the previous month for the first time in 19 months. Inflation peak-out expectations were reflected, and the S&P 500 and the Dow +2.67% and +2.00%, respectively, over the past week, while the Russell 2000 and Nasdaq +5.26% and +4.82%, showing a relative advantage.
In the bond market, 2-year government bond yields fell -1.8bp, 10-year and 30-year yields -5.5bp, and -7.8bp, as the December employment report confirmed lower-than-expected wage growth and started to reflect it in advance. The yen fell to the level of 127 yen against the dollar due to the additional tightening alert ahead of the Bank of Japan's(BOJ) monetary policy meeting (MPM), and the dollar index continued its bearish trend to around 102pt. Gold prices recovered to the $1,900 level for the first time in nine months amid the perception of policy path changes and falling real interest rates, and West Texas Intermediate(WTI) oil prices rebounded to the $80 level due to a combination of weak dollar and supply and demand uncertainties.
In the global Exchange Traded Fund(ETF) market, showed continuously the trend of expansion centering on the bond ETF market last week. Although there was a net inflow of funds into the stock ETF market within a week, the size decreased significantly to +2.23 billion. In particular, -3.63 billion dollars were leaked from the stock ETF market in North America, showing that investment funds were withdrawn for two consecutive weeks.
On the other hand, in the case of the bond ETF market, the inflow of funds throughout the world except for emerging Asia and South America was confirmed. In particular, $ 10.47 billion flowed into the bond-type ETF market in North America, leading the overall fund flow of global ETFs.
Market experts says, the weekly capital inflow and outflow status of U.S.-listed ETF stocks also reflected expectations for the pace of interest rate hikes and changes in the global financial market environment. Among stock-type ETFs, +1.79 billion dollars have flowed into SPY (S&P500), a representative index-following ETF, and a total of +1.22 billion dollars has flowed into IEMG and VWO, a stock market ETF in emerging countries. RSP (S&P500), XLI (industrial goods), JEPI/SCHD (high dividend), and XLF (financial) were also on the list of top fund inflows.
In the case of bond-type ETF stocks, funds flowed into HYMB (HY local bonds), LQD (IG corporate bonds), MBB (MBS), HYG (high yield), EMB (emerging countries), and TLT (long-term government bonds) as the outlook for policy path changes was more actively reflected.
December retail sales (expected: MoM-0.9%), which are scheduled to be announced this week, are expected to maintain expectations of adjusting the pace of interest rate hikes. In addition, companies' earnings announcements at a time when their eye level has been lowered are not expected to be a big burden on stock prices. The Fed personnel's speech will be conducted at a level where the existing stance is reaffirmed, and noise related to debt limits, rebounding commodity prices, and BOJ's monetary policy change could serve as volatility factors, but overall investor sentiment is likely to continue.
An analyst of Hana Securities concludes, "while changes in the global financial market environment due to policy changes and expectations for a recovery in the cyclical industry, ETFs such as XLK (technology stocks), XLI (industrial goods), PAVE (infrastructure), IEMG (emerging stock markets), FXI (large Chinese stocks), and VGK (European stock markets) are considered to be worth paying attention."
