The charts that matter: the Fed springs a surprise

As the US Federal Reserve turns hawkish on inflation, we look at how that’s affected the charts that matter most to the global economy.

Welcome back. 

In this week’s magazine, we examine the shaky foundations of the  internet, starkly demonstrated the other week when huge chunks of it went offline after an obscure but vital company’s customer changed their preferences. We also look at how to invest in stem cell technology – the “building blocks of the body” that will revolutionise medicine – and pick the best bets in the sector.

No star guest for this week’s podcast, but Merryn is joined by John to talk about all things inflation. What’s causing it? Is it a temporary blip? What can you do to combat it? And there’s a very interesting story about how we came to decide that 2% was the target to aim for. It might surprise you – find out all about it here

This week’s “Too Embarrassed To Ask” looks at sovereign bonds – what they are and how they work. You can watch that here.

Here are the links for this week’s editions of Money Morning and other web articles you may have missed:

Now for the charts of the week. 

The charts that matter 

Gold saw a sudden drop after the US Federal Reserve came out as more aggressive on inflation than many expected.

Gold price chart

Gold price chart

(Gold: three months)

The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) responded to the prospect of higher interest rates by climbing sharply.

US dollar currency chart

US dollar currency chart

(DXY: three months)

But it doesn’t seem to have affected the Chinese yuan (or renminbi) much (when the red line is rising, the dollar is strengthening while the yuan is weakening). 

USD/CNY currency chart

USD/CNY currency chart

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond recovered from last week’s big drop.

US Treasury bond yield chart

US Treasury bond yield chart

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond turned back up, too.

Japanese government bond yield chart

Japanese government bond yield chart

(Ten-year Japanese government bond yield: three months)

And the yield on the ten-year German Bund headed back up toward positive territory, though remained negative.

German bond yield chart

German bond yield chart

(Ten-year Bund yield: three months)

Copper fell sharply. Could this be the end of the commodities bull run already? Probably not, says Dominic – though metals certainly aren’t looking too hot.

Copper price chart

Copper price chart

(Copper: nine months)

The closely-related Aussie dollar followed the copper price down.

AUD/USD currency chart

AUD/USD currency chart

(Aussie dollar vs US dollar exchange rate: three months)

Bitcoin is trading in a range – waiting to do something spectacular, no doubt. Saloni had a look at an eventful week for the cryptocurrency in our new crypto-roundup. Read that here.

Bitcoin price chart

Bitcoin price chart

(Bitcoin: three months)

US weekly initial jobless claims rose for the first time in a long while, climbing 37,000 to 412,000, compared to 375,000 last week. The four-week moving average fell by 8,000 to 395,000 from 403,000 the week before. 

US initial jobless claims chart

US initial jobless claims chart

(US initial jobless claims, four-week moving average: since Jan 2020)

The oil price kept on climbing. One commodity that’s still definitely in a bull market. 

Brent crude oil price chart

Brent crude oil price chart

(Brent crude oil: three months)

Amazon continued its big climb.

Amazon share price chart

Amazon share price chart

(Amazon: three months)

Tesla, however, just drifted sideways.

Tesla share price chart

Tesla share price chart

(Tesla: three months)

Have a great weekend. 

Recommended

Just how green is nuclear power?
Energy

Just how green is nuclear power?

Nuclear power is certainly very clean in terms of carbon emissions, but what about the radioactive waste produced as a byproduct? It’s not as much of …
22 Jan 2022
Why GSK should turn down Unilever’s billions
UK stockmarkets

Why GSK should turn down Unilever’s billions

Unilever has offered GSK £50bn for its consumer division. But while the cash will be a temptation, the deal is not in the interests of shareholders or…
22 Jan 2022
The charts that matter: the start of the big crash?
Global Economy

The charts that matter: the start of the big crash?

US tech stocks fell further this week, more than 10% down on their November high. There’s what happened to the charts that matter most to the global e…
22 Jan 2022
Cryptocurrency roundup: authorities tighten the screw
Bitcoin & crypto

Cryptocurrency roundup: authorities tighten the screw

Saloni Sardana looks at the cryptocurrency stories that caught our eye this week.
21 Jan 2022

Most Popular

Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022
US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022