Sujata Rao gives a glimpse at what lies ahead.

Can retail investors have saved the day? The Nasdaq fell by more than 2 percent Monday, but it closed in positive territory as bargain-hunters flooded in.

This is a common scenario that has been repeated over the last year, and it’s often blamed on amateur traders. Also, buy-the dip advice was also offered by buy-side analysts. They noted that markets are well on the way to pricing four U.S. rate increases this year. This makes any further surprises from hawkish traders more difficult.

It’s possible that this has caused the dollar to flatline in the month of December, well below 16-month highs reached at November’s end. On Monday, Treasury yields ended a six-session upward streak.

Wall Street futures remain unsure of their direction as European shares open firmer. Markets will wait for any new information, and they won’t be surprised if Wednesday’s U.S. consumer price index print actually exceeds 7% as expected.

As a reminder, global inflation pressures are being reminded by a survey showing that Japanese households expect inflation to rise at an unprecedented rate of more than 2 years.

Although policymakers are calmly certain that they can stop runaway inflation, pre-released statements show Federal Reserve Chairman Jerome Powell telling Congress that the bank will “prevent higher inflation from becoming entrenched”.

And although euro area inflation has been running at 5% for the past few months, Philip Lane (ECB chief economist) says he is not expecting prices to rise above the 2% target medium term.

The markets are still convinced that the terminal rate (or the interest rate peak) will fall in the current cycle.

Goldman Sachs (NYSE 🙂 warns that U.S. final rate pricing may be too high. With the Nasdaq’s market cap falling by $1.5 trillion, bargain-hunting may become a necessity.

There are key developments which should give more direction to the markets Tuesday

Take-Two’s “Grand Theft Auto” video game developer (NASDAQ) Interactive will purchase Zynga, (NASDAQ) at $11 billion

Xmas: Britons eat at home, avoid restaurants

ECB President Christine Lagarde speaks

Speakers: President Esther George of Kansas City and Chairman Jerome Powell.

-U.S. 3-year note auction