Stocks enter wait-and-see mode, Apple nears USD 3T, Jolts shows labor remains tight, BOC refrains hawkishness, Pfizer booster study, bitcoin holds USD 50k

US stocks entered wait-and-see mode for Friday’s inflation report that could fuel further Fed rate hike bets. Fed rate hike expectations for next year are between two and three, but that will change after we see the Fed’s latest dot plots next week. Earlier this morning, equities got a boost after a new study showed that Pfizer’s booster does provide a high level of protection against Omicron. It seems Wall Street is expecting US equities to outperform all the major European indexes until the risk of fresh COVID restrictions eases.

Apple shares jumped higher after the Nikkei reported that iPhone maker Apple told suppliers to accelerate their output for November, December, and January. It seems Apple will remain a key holding for many investors, especially now that its market cap is closing in on the USD 3 trillion level.

Jolts

The October Jolts report showed the labor market is not cooling as the number of job openings jumped to 11.03 million. The quits rate edged lower but standing at 2.8% is still close to series high levels.  Worker shortages remain and that should keep the pressure on employers to deliver more wage increases.

BOC says more support needed

The Bank of Canada refrained from turning hawkish, acknowledging the current situation still requires considerable monetary policy support. The policy rate will remain held near zero until economic slack is absorbed so that the 2% inflation target is sustainably achieved. The BOC expects inflation to remain elevated through the first half of 2022, but then ease back towards 2%.

The Canadian dollar initially weakened following the rate decision as some traders started to doubt a rate hike would happen over the next two meetings. The 2-year Canadian bond yield fell 6.2 basis points to 1.082%. Rate hikes are coming, possibly with three in 2022, with April likely being when BOC will be ready for liftoff.

Pfizer

Another neutralization study helped provide optimism that the Pfizer vaccine seems likely to be effective in preventing severe disease.  People who were infected with COVID and subsequently vaccinated with two doses had good protection against Omicron.

The key takeaway from the neutralization studies suggests booster shots will be strongly encouraged. Pfizer shares rallied as only 24% of the fully vaccinated population in the US have gotten the booster shot.

Bitcoin

Bitcoin was little changed after a group of crypto CEOs showed agreement on providing protections for consumers but concerns with over-regulation. The House Hearing on Digital Assets and the Future of Finance provided an education to lawmakers and paved the way for future crypto regulation.

Ethereum held onto its earlier gains since much of the speak on Capitol Hill focused on stablecoins and the growing bullseye on their back. The House doesn’t want to get in the way of Web 3.0 as blockchain could have a vast impact on American lives. As long as everything is still mostly being built on ethereum, the bull case remains intact.

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