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January 31, 2022

News

Monday Briefing – 31st January 2022

Highlights

● A confluence of events led to a highly volatile week on equity markets with very wild intraday trading action, multiple pullbacks and sharp reversals. Those events included inflation concerns, a widely anticipated FOMC interest rate decision and rising geopolitical tensions in Ukraine.

● Amid this panoply of warring narratives, the US equity market delivered an impressive twist last Friday, avoiding a fourth consecutive week of losses.

● The Fed confirmed a rate lift-off in March, as well as the end of its bond-buying programme by then. The FOMC also released principles for balance sheet reduction. Under the proposed framework, it will gradually let securities mature uninvested, rather than conducting sales.

● The biggest takeaway was Powell’s emphasis that this cycle is different from the last round of tightening in that inflation is well-above target, the labour market is historically tight, and growth projections remain above long-run potential. While the Chair demurred when asked what that meant for parameters of monetary policy, he did not rule out a faster pace of rate hikes or larger increments.

● Oil posted its sixth straight weekly gain driven in part by the continued massing of Russian troops along the border with Ukraine. Attention will shift to the OPEC+ meeting on Feb. 2 to assess the market and decide on supplies for March.

● On the corporate front, Tesla shares fell more than 11% after it warned about supply chain challenges and the fact that the company will not be producing new models in 2022. Strong Apple earnings bolstered investor sentiment with sales overcoming the supply chain crunch. On the other side of the Atlantic, LVMH published stellar and record annual sales, a performance exemplifying the V-shaped recovery experience.

● Central banks will continue to dominate the agenda as we move into February, with both the ECB and the Bank of England set to make policy decisions on Thursday. Earnings season will continue in full flow, with an additional 111 companies in the S&P 500 reporting, including Amazon, Alphabet and Meta.

Economic Calendar

Monday – Japan Consumer Confidence (January) and Unemployment Rate (December). Spain Inflation (Preliminary, January) and Retail Sales (December). Eurozone GDP Growth (Flash, Q4). Germany Inflation Rate (Preliminary, January).

Tuesday – Reserve Bank of Australia Monetary Policy Committee. Germany Retail Sales (December) and Unemployment (January). UK House Prices (January). France Inflation (Preliminary, January). US, Eurozone and UK Markit Manufacturing PMI (Final, January). Eurozone Unemployment (December). US JOLTs Job Openings (December) and ISM Manufacturing PMI (January).

Wednesday – Eurozone Inflation (Flash, January). US ADP Employment Change (January). OPEC and non-OPEC Ministerial Meeting. Central Bank of Brazil Monetary Policy Committee.

Thursday – US, UK, Eurozone, Japan Composite PMI (Final, January). Bank of England Monetary Policy Committee. European Central Bank Monetary Policy Meeting. US Weekly Jobless Claims, ISM Non-Manufacturing PMI (January), Factory Orders (December).

Friday –  Reserve Bank of Australia statement on monetary policy. France Industrial Production (December). Eurozone Retail Sales (December). US Unemployment Rate, Average Hourly Earnings, Non-Farm Payrolls and Participation Rate (January).

Disclaimer

All financial data and/or economic information released by this Publication (the “Publication”); (the “Data” or the “Financial data and/or economic information”), are provided for information purposes only, without warranty of any kind, including without limitation the warranties of merchantability, fitness for a particular purpose or warranties and non-infringement of any patent, intellectual property or proprietary rights of any party, and are not intended for trading purposes. Banque Internationale à Luxembourg SA (the “Bank”) does not guarantee expressly or impliedly, the sequence, accuracy, adequacy, legality, completeness, reliability, usefulness or timeless of any Data. All Financial data and/or economic information provided may be delayed or may contain errors or be incomplete. This disclaimer applies to both isolated and aggregate uses of the Data. All Data is provided on an “as is” basis. None of the Financial data and/or economic information contained on this Publication constitutes a solicitation, offer, opinion, or recommendation, a guarantee of results, nor a solicitation by the Bank of an offer to buy or sell any security, products and services mentioned into it or to make investments. Moreover, none of the Financial data and/or economic information contained on this Publication provides legal, tax accounting, financial or investment advice or services regarding the profitability or suitability of any security or investment. This Publication has not been prepared with the aim to take an investor’s particular investment objectives, financial position or needs into account. It is up to the investor himself to consider whether the Data contained herein this Publication is appropriate to his needs, financial position and objectives or to seek professional independent advice before making an investment decision based upon the Data. No investment decision whatsoever may result from solely reading this document. In order to read and understand the Financial data and/or economic information included in this document, you will need to have knowledge and experience of financial markets. If this is not the case, please contact your relationship manager. This Publication is prepared by the Bank and is based on data available to the public and upon information from sources believed to be reliable and accurate, taken from stock exchanges and third parties. The Bank, including its parent,- subsidiary or affiliate entities, agents, directors, officers, employees, representatives or suppliers, shall not, directly or indirectly, be liable, in any way, for any: inaccuracies or errors in or omissions from the Financial data and/or economic information, including but not limited to financial data regardless of the cause of such or for any investment decision made, action taken, or action not taken of whatever nature in reliance upon any Data provided herein, nor for any loss or damage, direct or indirect, special or consequential, arising from any use of this Publication or of its content. This Publication is only valid at the moment of its editing, unless otherwise specified. All Financial data and/or economic information contained herein can also quickly become out-of- date. All Data is subject to change without notice and may not be incorporated in any new version of this Publication. The Bank has no obligation to update this Publication upon the availability of new data, the occurrence of new events and/or other evolutions. Before making an investment decision, the investor must read carefully the terms and conditions of the documentation relating to the specific products or services. Past performance is no guarantee of future performance. Products or services described in this Publication may not be available in all countries and may be subject to restrictions in some persons or in some countries. No part of this Publication may be reproduced, distributed, modified, linked to or used for any public or commercial purpose without the prior written consent of the Bank. In any case, all Financial data and/or economic information provided on this Publication are not intended for use by, or distribution to, any person or entity in any jurisdiction or country where such use or distribution would be contrary to law and/or regulation. If you have obtained this Publication from a source other than the Bank website, be aware that electronic documentation can be altered subsequent to original distribution.

As economic conditions are subject to change, the information and opinions presented in this outlook are current only as of the date indicated in the matrix or the publication date. This publication is based on data available to the public and upon information that is considered as reliable. Even if particular attention has been paid to its content, no guarantee, warranty or representation is given to the accuracy or completeness thereof. Banque Internationale à Luxembourg cannot be held liable or responsible with respect to the information expressed herein. This document has been prepared only for information purposes and does not constitute an offer or invitation to make investments. It is up to investors themselves to consider whether the information contained herein is appropriate to their needs and objectives or to seek advice before making an investment decision based upon this information. Banque Internationale à Luxembourg accepts no liability whatsoever for any investment decisions of whatever nature by the user of this publication, which are in any way based on this publication, nor for any loss or damage arising from any use of this publication or its content. This publication, prepared by Banque Internationale à Luxembourg (BIL), may not be copied or duplicated in any form whatsoever or redistributed without the prior written consent of BIL 69, route d’Esch ı L-2953 Luxembourg ı RCS Luxembourg B-6307 ı Tel. +352 4590 6699 ı www.bil.com.

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