Geoffrey Smith 

Investing.com – The Federal Reserve is getting serious. Expect it to announce later a faster withdrawal of its bonds purchases. This will pave the way to an earlier start for next year’s rate increase cycle. After the U.K.’s inflation spike in November, it is expected that the Bank of England will move this week. China’s economy continues to falter as more information points towards deeper trouble in its property market. Omicron variant Covid-19 fears could cause oil prices to fall below $70, leading to increased demand-sapping lockdowns. What you need to know on Wednesday, December 15th in the financial markets

1. You-know-what

There’s a central bank meeting going on that you may have heard about. The meeting ends at 2 PM ET (2000 GMT). At 2:30, the chairman will speak about their conclusions and future outlook.

Market consensus suggests the Federal Reserve will look to wrap up its bond-buying by March, as implied by Chairman Jerome Powell’s testimony to Congress last week. This would allow for an initial interest rate increase in the middle of this year. There is still time to add one or two until the end 2022. As ever, the ‘dot-plot’ of policymakers’ expectations for rates over the next two years will be important.

It is set against the backdrop of high consumer inflation of 39 years and high producer price inflation of 10 years, both of which have not shown much signs of slowing in the last month.

2. China stumbles once more

China’s economy continues to sputter, against the backdrop of its ongoing real estate crisis and the arrival of Omicron-variant Covid-19 in the country.

The data series that focuses on fixed assets was dominated by property, and it saw a 5.2% increase in investment in November. This is the slowest growth in almost two years. Perhaps more important, this was the sixth consecutive month in which growth has been slower than predicted. Sentiment in the real estate sector has been shaken in the last two days as Shimao Group – widely seen as one of the industry’s stronger players – was forced to inject funds into one of its weaker units.

Additionally, offshore bondholders of Kaisa are in talks to buy some of the group’s bad loans on the mainland in search of better access to information on how the restructuring process is being conducted.

China’s industrial production rose slightly above expectations, but the retail sales growth was disappointing.

3. Fed’s stock market flattens. Trump media company is in focus

The U.S. stock market is flat before the open and few are willing to accept new positions in the face of the Fed meeting.

By 6:20 AM ET, were up 15 points, essentially unchanged from the previous session’s close, as were . Another 0.2% fell. After U.S. producers price data strengthened expectations for Fed tightening, all three indicators posted further losses Tuesday.

The stocks that are most likely to be the focus of attention later include Digital World Acquisition Corp (NASDAQ:), the SPAC which is merging with Donald Trump’s new media company. Trump Media had previously signed an agreement for partnership with Canadian company Rumble.

Lennar All three companies (NYSE :), REV Group (NYSE 🙂 and ABM (NYSE 🙂 will report their earnings prior to the open.

4. CPI rise in U.K. puts rate hike on the cards

Traders flip-flopped yet again on their expectations for the Bank of England’s policy meeting on Thursday after inflation data for November showed the annual CPI surging 5.1%, well above forecast.  The Bank’s senior figures hadn’t expected it to hit 5% until April, when a hike in regulated household energy prices takes effect.

Producer price inflation data in the U.S. also exceeded forecasts. In short term interest rate futures, there is a 70% chance of a rate rise on Thursday by 15 basis points.

This puts the BoE into a difficult position. Before deciding to raise rates, officials had said they wanted to know how Omicron-variant Covid-19 spreads through the economy. The U.K.’s health authorities suspect that Omicron is spreading through the population at an unprecedented rate, although there has been no noticeable surge in hospital admissions so far.

5. Omicron and API fear oil shortages.

The fear that Omicron could spread to other countries will cause governments to impose more economic and social restrictions on the oil market, which led to a sharp drop in crude oil prices at a moment when global markets are already beginning surplus.

The U.S. government will release its weekly inventory data at 10:30 AM ET, after the American Petroleum Institute’s figures showed a smaller than expected drop in stockpiles for both crude and refined products.

Futures fell 1.6% by 6:06 AM ET to $70 per barrel, at $69.62. Futures fell 1.4% to $72.67 per barrel.