Market Drivers – US Session – 28 January 2022

US Treasury yields ended Friday’s trading in a bearish trend, affected by the relative stability in US inflation rates, which was reflected by fresh data. Bond yields for ten years fell to 1.782%, compared to the last daily close, which recorded 1.804%.

Economic Data
The oil and gas rig count, an early indicator of future output, rose six to 610 in the week to Jan. 28, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.

France has posted its strongest growth in over 50 years, as the economy recovered from the economic shock of the pandemic. The French GDP expanded by 7% last year, data just released shows; the strongest annual expansion since 1969, as the economy showed resilience in the face of supply chain disruption.

The Eurozone’s two largest economies had a very different end to 2021, as the region’s recovery from the pandemic continued. France beat forecasts with 0.7% growth in the last quarter, helping it rack up its best annual growth since 1969.

A report released by the US Commerce Department on Friday showed personal income in the US increased by less than expected in the month of December. The Commerce Department said personal income rose by 0.3 percent in December after climbing by an upwardly revised 0.5 percent in November.


Disposable personal income, or personal income less personal current taxes, also edged up by 0.2 percent in December after rising by 0.4 percent in November.

When adjusted for inflation, however, disposable personal income actually dipped by 0.2 percent for the third straight month.


The report also showed personal spending fell by 0.6 percent in December after rising by 0.4 percent in November. The decrease in spending matched economist estimates. Excluding price changes, real personal spending tumbled by 1.0 percent in December after slipping by 0.2 percent in the previous month.



Data released on Friday showed the Employment Cost Index (ECI) rose 1% during the fourth quarter, and 4% during the year. Analysts at Wells Fargo point out the quarterly increase was more restrained than Q3’s 1.3% gain, and they consider that may tamp down fears of a wage-price spiral amid signs businesses are not upping pay at such a frenzied pace.

The University of Michigan Consumer Sentiment fell to 67.2 from the flash estimate of 68.7, its lowest reading since 2011. The University of Michigan’s (UoM) final estimate of the Consumer Sentiment Index came in at 67.2 in December, below the flash estimate of 68.7 released earlier in the month, and well below November’s reading of 70.6.

The new data marked a fresh low since 2011. The Current Conditions index fell to 72.0 versus expectations for 73.2 and down from November’s 74.2 reading, while the Consumer Expectations index fell to 64.1 from 68.3 in November, below the expected 65.8.

Other Developments
Front-month WTI futures touched fresh seven-year peaks on Friday, reaching $88.82 for the first time since October 2014, before pulling back somewhat to just below $88.00 again.

Still, that leaves WTI trading more than 50 cents higher on the session and about $3.0 higher on the week. WTI is on course to post a sixth successive weekly rally, a run that has seen the American benchmark for sweet light crude oil rally more than $20.00 from the low-$66.00s.

The next area of major upside resistance is the psychologically important $90.00 level and then the late-2013 lows in the mid-$91.00s just above it.
US President Joe Biden and his EU counterpart Ursula von der Leyen pledged to cooperate on guaranteeing the energy security of Europe and Ukraine amid the standoff triggered by Russia amassing troops at Ukraine’s border. read more

US crude was up 0.12% at $86.71 per barrel and Brent was at $89.92, up 0.65% on the day. Investors cautiously start to buy US crude when prices fall given supply disruption concerns due to rising geopolitical tensions. The market expects supply will stay tight as OPEC+ is seen to keep the existing policy of gradual increase in production.

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