Wayne Cole

SYDNEY – Asian share prices started to slow on Monday, as Omicron appeared in more countries. Investors faced a seven-day wait for U.S. Inflation figures that would settle the rate of interest.

Mixed U.S. employment reports did not change expectations about a Federal Reserve that would tighten more quickly. Friday’s consumer prices report, due on Friday, was likely to convince the market for an early tapering.

Omicron continued to be a concern, as the variant reached about one third of U.S. States. However, there were South Africa reports that patients had experienced mild symptoms. [

Early trade was sluggish as MSCI’s broadest index of Asia-Pacific shares outside Japan inched down 0.2%.

eased 0.7%, even as the government considered raising its economic growth forecast to account for a record $490 billion stimulus package.

Wall Street was looking to rally after Friday’s late slide, with adding 0.4% and Nasdaq futures 0.1%.

While headline U.S. payrolls had underwhelmed in November, the survey of households was far stronger with a 1.1 million jump in jobs taking unemployment down to 4.2%.

“We think the Fed will view the economy as much closer to full employment than previously thought,” said Barclays (LON:) economist Michael Gapen.

“Hence, we expect an accelerated taper at the December meeting, followed by the first rate hike in March. We continue to expect three 25 basis point hikes in 2022.”

The futures market is almost fully priced for a hike to 0.25% by May and 0.5% by November.

The hawkish outlook is one reason BofA chief investment strategist Michael Hartnett is bearish on equities for 2022, expecting a “rates shock” and a tightening of financial conditions.

He favours real assets, real estate, commodities, volatility, cash and emerging markets, while bonds, credit and equities could struggle.

For now, short-term Treasury yields are being pushed higher but the longer-end has rallied as investors wager an earlier start to hikes will mean slower economic growth and inflation over time and a lower peak for the funds rate.

Ten-year U.S. yields dived almost 13 basis points last week and were last at 1.38%, shrinking the spread over two-years to the smallest this year. [U/S]

Short-term rates have risen to support the U.S. Dollar, especially against growth-leveraged currencies that are vulnerable to Omicron’s spread.

Although the U.S. Dollar reached 13-month highs against the Australian and New Zealand dollar, its index was fairly stable on majors at 96.221.

Euro was at $1.1303, above the recent bottom at $1.1184, while dollar dropped ground to 112.94, thanks to the safe haven Japanese yen.

On Saturday, the cryptocurrency market lost a fifth its value due to profit taking and macroeconomic worries. The result was almost a billion dollars in selling across cryptocurrencies.

Bitcoin was at its lowest point of $41,967 on the weekend, but it was still $49436 last week.

The decline in longer-term bond yields has provided some support for gold, however, it’s been trading in sideways over several months, with the $1,720/1.870 region. On Monday, the price was stable at $1.783 an ounce.

The supply shortages have led to oil prices being much more volatile than the worries about Omicron spreadings. Prices have fallen for six consecutive weeks, with prices dropping recently. [O/R]

The market attempted a rebound Monday, with Brent climbing $1.29-$71.17 per barrel while U.S. crude rose $1.30-$67.56 per barrel.