Markets are undergoing a resurgence as a result of new COVID-19 concerns. The data points may be the catalyst to rekindle bond market ructions. A blowout U.S. job print, and above-forecast European inflation could give fodder for those who argue central banks should speed up unwinding stimulus.

The week ahead for markets in Singapore is here: Dhara Ranasinghe Karin Strohecker, Ahmad Ghaddar and Ahmad Ghaddar in London. Ira Iosebashvili is in New York. Lewis Krauskopf in New York. Sujata Raho compiled the following.

1/DOVES, HAWKS & COVID

The COVID-19 and inflation fears are looming large for policymakers, who will have to make decisions on two ECB bond purchasing schemes within three weeks.

Tuesday brings November flash euro zone inflation. The October print showed a 4.1% increase and most people see this staying at or above the ECB’s 2% goal next year. CPI data from France, Spain and Germany are released Monday and Tuesday.

Inflation is on the rise and ECB hawks are warning against making monetary policy too loose. In the meantime, a new German government could increase the minimum wage by 25%.

They have resonated with the edgy market. The ECB’s resurgent COVID helps to strengthen their position as Europe fights a new surge. Meanwhile, alarm is raised when news about a new HIV variant in South Africa goes out.

Investors have retracted their rates-hike bets regarding the U.S.A, UK and euro zone due to renewed economic uncertainty. The doves appear to have more ammunition than those who are calling for an immediate end to the stimulus. Inflation watching in the euro area, https://fingfx.thomsonreuters.com/gfx/mkt/egvbkadropq/theme2511.png

2/JOBS FOR ALL

An encouraging November employment report may be helpful for those who believe the Federal Reserve’s $120 billion per month bond-buying needs to be unwound quicker, as the taper is underway at the Federal Reserve.

Although the Fed predicts that the Fed will complete the unwinding in mid-2022 the Fed has seen strong economic growth, inflation exceeding 2% and a rapid unwind have led to speculation about earlier rate rises and faster disengagement.

Weekly data showing the lowest number of jobless claims since 1969 has boosted expectations for payroll. The forecasts for 563,000 new jobs by employers are positive. Any increase in that number could revive bond market turmoil and push the dollar higher. November U.S. nonfarm payrolls, https://fingfx.thomsonreuters.com/gfx/mkt/zdpxonzqmvx/Pasted%20image%201637784564860.png

3. TURKEY TANTRUM

Turkey has just provided another reminder of the importance of prudent monetary policies, especially in emerging markets when inflation is high.

Turkey’s President Tayyip Erdogan reiterated his belief that inflation of double-digits can be controlled by lowering interest rates. With a 15 percent plunge Tuesday, the Turkish lira is now in unfamiliar waters.

While the currency has partially recovered, however, the central banks may announce another rate reduction at their Dec. 16 meeting.

Mexico is also experiencing monetary policy concerns. Peso took a tumble after President Donald Trump unexpectedly resigned as central bank governor and instead appointed a deputy finance Minister.

The Fed’s taper mode, a strengthening dollar and higher inflation leave little for the emerging market central bank to make mistakes. Lira timeline November 26, https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwndnkvo/Lira%20timeline%20November%2026.PNG

4. MORE OIL, OR LESS

Since August, the OPEC+ oil producer’s group has held steady to monthly production increases of 400,000 barrels/day (bpd), defying pleas from consumer nations for more oil in order to keep prices down to $80-plus. They will meet Dec. 1 and 2, just after U.S. plans to remove 50 million barrels from their strategic oil reserves.

Oil markets have not been affected by the prospect of additional oil. Goldman Sachs (NYSE 🙂 described it as “a drop in an ocean”. Nonetheless, an OPEC+ source claimed that oil released by the United States of America and several other countries would make it more difficult to calculate.

OPEC+ will reduce production by 3.8 million bpd, or 4% of world consumption. Sources claim that there have not been any discussions about responding to U.S. moves by halting production increases. However, the group warned that the U.S. move could lead to an oil glut next spring. price, https://graphics.reuters.com/GLOBAL-OIL/byprjkwaepe/GLOBAL-OIL.jpg

5/SLOW, BUT STABLE? A new wave of mortgage growth supports the hope that Chinese credit may be at its lowest point, and that the impact from the real estate crash is beginning to diminish.

Some signs point to a shift toward policy easing. Although benchmark rates are not changing, banks have been urged to lend money to developers. Authorities are trying to reduce funding costs for small businesses and are working to stabilize the yuan.

The Tuesday Purchasing Managers’ Indexes may show that the tide might be turning. But keep an eye on Dalian https://www.reuters.com/world/china/china-faces-biggest-delta-outbreak-infections-grow-northeastern-city-2021-11-15, where COVID is on the rise

(1 euro = 14.0991 liras) Loan growth spurs hope for China’s credit outlook, https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwnzbgvo/Pasted%20image%201637734453580.png