Market Updates.

Inflationary pressure in the US to stay buoyant for quite sometimes as input inflation (Producer Price Index, PPI) rose to a record high of 9.6% while CPI inflation accelerated to +6.8%yoy in Nov-21, the fastest level since Jun-82. The strong inflation trends may prompt the Federal Reserves to speed-up its tapering process of bond purchases from June to Mar-22. Hence, this will allow bigger room for the central bank to start its normalisation of monetary policy.

The Government yesterday announced economic relaxation measures, including the reopening of non-essential manufacturing sectors (which includes auto and component plants) from 16th August. In addition, auto distribution and retailing is listed as one of 11 sectors allowed to resume operations under the retail sector relaxation. This is a significant positive as it means the entire automotive value chain will be back in operations from this week onwards.

WHO warned yesterday that the Omicron variant spreads at an unprecedented rate, faster than other variants. This poses a high risk for Covid-19 infections to resurge in many countries as existing vaccines are mostly not effective to contain the spread. Although most cases linked to Omicron were milder (thus far), rising infections could once again put a significant strain on the healthcare system. Authorities are urged to act and curb the spread.