Geoffrey Smith 

Investing.com – Stocks remain under pressure following an inflation report. China’s Zero-Tolerance Covid-19 Policy is under new strain after evidence shows that there has been community spreading in an important port city. Russia and the U.S. reduce chances for easy progress while negotiations begin to de-escalate Ukraine’s situation. Oil prices stabilize after oil price disruptions in Kazakhstan, Libya and Kazakhstan ease. This is what you should know about financial markets Monday 10 January.

1. Yields rise after payrolls; Goldman forecasts

Bond yields continued their upward march after the U.S. jobs report on Friday again highlighted the tightness of the labor market, with a sharper-than-expected rise in wage costs and a bigger-than-expected drop in the unemployment rate.

Analysts at Goldman Saches now predict 4 interest rate hikes from the Federal Reserve this year, and there was no implicit contradiction from Richmond Federal Reserve president Tom Barkin in an interview published by The Wall Street Journal on Monday, saying that a rate hike as early as March is “conceivable.”

At 0.87% the interest rate-sensitive yield held close to its two-year peak, while benchmark yield climbed slightly to 1.78%. After rising to their highest level in several years, European bond yields have flattened after a week.

2. Omicron roundup – U.K. waves start to peak, Australia’s zero tolerance policy is in tatters and China is under strain

Fresh data from across the globe clearly showed that the nature of the pandemic is changing. Signs out of the U.K. in which Omicron-variant waves were first recorded, will cheer optimists. It is the first advanced country to do so.

However, pessimists will point out surging cases numbers from the U.S.A to India and Australia as well as a parallel increase in absenteism among front-line workers in the service sector, particularly in healthcare.

Omicron has effectively wrecked Australia’s zero-Covid policy that had held for two years until last week. China has not abandoned that position, though, and is conducting a massive testing campaign in Tianjin port, where two Covid-19-related cases were found.

3. Stocks to open lower. Pot stock earnings due

U.S. stocks will open lower than expected, as technology continues to perform poorly against the backdrop of rising bond yields. High interest rates increase the risk of placing bets against companies that have only long-term profits prospects. The turn in long term rates has exposed many companies’ skyrocketing valuations.

At 6:15 AM ET, the stock market was flat. They were 0.1% lower than expected and 0.3% higher at 6.15 AM ET.

Trade is expected to stay subdued in anticipation of the release of data on consumer prices inflation later this week. Attention may focus on a JPMorgan (NYSE:) retail conference ahead of the traditional start of earnings season on Friday, when Wall Street’s blue chips start to report. Tilray (NASDAQ) is the head of a slim earnings schedule for Monday.

4. Russia-USA talks Ukraine following the suppression of protests in Kazakh

While the U.S., Russia and other countries began talks to de-escalate tensions around Ukraine, both sides cautioned that it would not be easy.

Russia wants assurances from NATO that Ukraine won’t be allowed to join, but the U.S. insists that Ukraine has as much freedom as other countries to decide its political affiliation. More than 100,000 Russian soldiers remain encamped at the border of Russia and Ukraine.  The negotiations are not being attended by Ukraine nor the European Union.

Talks are held a week following the restoration of order by Russian-led troops in Kazakhstan’s former Soviet Republic of Kazakhstan. The move bolstered Russian power throughout central Asia.

5. As output disruptions are overruled, oil prices fall

The shortfall in Libyan and Kazakhstani oil exports last week started to decrease, which led to the stabilization of oil prices. Tengiz is a 600,000. barrel per day field that Chevron owns. It was shut down last week due to protests. The venture, which is now owned by Chevron, stated on Sunday that it has begun returning to its normal production.

Libya is currently completing work on its new export pipeline. This has allowed the country to generate 900,000. Tensions related to the country’s smouldering civil war are still ensuring that output remains well below the country’s potential.

Futures fell 0.3% to $78.69 per barrel at 6:25 AM ET. They were 0.1% lower at $81.64 per barrel at 8:26 AM ET.