Stay on top of this week’s hot topics with Investing.com

By Noreen Burke and Leandro Manzoni

Investing.com – This is inflation week in Brazil and the United States. the President The Federal Reserve, and the institution’s vice president, Lyle Brainard, will be debated in the US Congress on Tuesday and Thursday.

The week also marks the start of the fourth quarter of the US earnings season, with several major banks reporting results on Friday. Volatility is expected to remain high in stock markets after a difficult start into 2022, as the year remains under pressure.

Here’s what you need to know to start your week.

Check it out: Investing.com’s Economic Calendar

1. Inflation data

Inflation has been one of the dominant topics in the national and global financial markets in 2021. This week we will know the final numbers of price hikes in Brazil and the United States last year.

Broad CPI () will be released on Wednesday (12). Market expectations indicate a slowdown in prices in December, estimated at a 0.65% increase by economists compared to the previous month, which recorded a 0.95% increase. The outlook for 2021 is 9.97%, which will also be a slowdown in relation to the 12-month high recorded at the IPCA in November (10.74%).

It will be the highest annual inflation rate since 2015 when it closed at 10.67%. The 2021 IPCA has broken the upper limit of 1.5 percentage points from last year’s inflation target (3.5%). The November (Thursday) and (Friday) numbers will also be known during the week.

In the US, consumer price inflation data released on Wednesday is expected to have topped 7% in the past 12 months, fast approaching a four-decade high — with it rising above 5% annually. Daily data is also expected to show an increase.

The inflation numbers are likely to shed light on why the Federal Reserve started the cycle of high inflation as early as March. Strengthening the argument in favor of faster tightening is Friday, which indicates that the labor market is at or near full employment.

According to the report, the probability of the first increase of 0.25 percentage points in March is 69.5% compared to 24.1% with the possibility of maintenance. The next meeting of the Federal Reserve will be held on January 26.

And while job growth was disappointing in December, it fell to a 22-month low, and wages rose strongly. Inflation data will be accompanied by reports from December to Friday.

2. Powell’s testimony

On Tuesday, Federal Reserve Chairman Jerome Powell is scheduled to appear before the Senate Banking Committee at a hearing to confirm his nomination for a second four-year term as US central bank chief, while the institution’s governor must appear before the same committee two days later. for a hearing for his appointment as Vice-President.

Several Federal Reserve officials are also expected to appear during the week, including, , and.

His comments will be closely watched in the wake of last week’s comments, which indicated that the “extremely tight” labor market and high inflation could force policy makers to raise interest rates sooner than expected.

3. Balance Sheets

Earnings season is in full swing next Friday, as investors look forward to fourth-quarter results from several major banks, including JPMorgan Chase (NYSE 🙂 (SA :), City Group (NYSE 🙂 (SA 🙂 e Wells Fargo (NYSE 🙂 (SA 🙂 before the market open on Friday.

Massive increases in US corporate earnings helped boost a 27% gain in 2021, but companies will likely struggle to publish similar numbers in the fourth quarter.

Profits for S&P 500 companies are expected to jump 22.3%, according to Refinitiv data cited by Reuters — a solid increase, albeit still at a slower pace than seen in the first three quarters of 2021. The supply chain crisis that helped lift the Prices last year are in the coming months, exceeding expectations for 2022.

In Brazil, Camil (SA :)’s third-quarter financial results will be announced on Thursday. The consensus on earnings per share (LPA) of R$0.2324 and revenue of R$1.7 billion in this period, which is slower than the previous period, when earnings per share were R$0.29 and revenue of R$2.22 billion. Shares of the food producer closed 0.28% higher at R$10.92 on Friday.

Check out: Investing.com’s Balance Sheet Calendar

4. The fluctuations must continue

Indications that the Fed was ready to raise interest rates faster than expected to combat spiraling inflation moved markets in the first week of 2022, and it looks like this volatility will continue.

Last week, the index was down 0.3%, down 1.9% and down 4.5%, as the benchmark bond yield soared to a two-year high on Friday with the prospect of the Federal Reserve raising interest rates.

“Sentiment has turned negative,” said Jake Dollarhyde, CEO of Longbow Asset Management in Tulsa, Oklahoma. “At the moment, the market is nervous and ready to sell at the first sign of bad news.”

Investors have been moving away from developing stocks, with a strong share of tech sector assets, and migrating to value-oriented stocks, which they believe can perform better in an environment with higher interest rates.

The increasing states of the omicron variant of Corona Virus It also contributed to the risk aversion in the markets.

5. Bitcoin

The market has been under pressure since the start of the new year, dropping to its lowest level since late September, amid widespread selling between Cryptocurrency Driven by concerns about the prospect of a more hawkish Fed.

The world’s largest cryptocurrency by market capitalization has fallen more than 40% since hitting an all-time high of $69,000 in November, driven by expectations that the US central bank will raise interest rates sooner than expected.

More serious monetary policy actions by the Federal Reserve may dampen investors’ appetite for riskier assets.

“We are seeing more and more widespread risk aversion across all markets these days as inflation concerns and higher interest rates seem to be high on speculators’ minds,” Matthew Depp, COO of cryptocurrency platform Stack Funds in Singapore told Reuters.

“Bitcoin liquidity has been significantly reduced on both sides and there is a risk of a dip to the 30K range in the near term.”

Bitcoin also came under downward pressure due to a drop in the global computing power of its network last week after the internet shut down in Kazakhstan amid a revolution that affected the booming cryptocurrency mining industry.

But bitcoin rose on Sunday, up 4.19% to $42,536 in the past 24 hours after falling below $41,000 on Saturday.

– Contributed by Reuters