EU governments have set a price ceiling for Russian oil. NFP report in the spotlight today

Investors are cautiously awaiting the release of key monthly US employment data, which could affect the Federal Reserve’s monetary policy. The monthly employment data is expected to show that the economy created fewer jobs in November than in the previous month. Treasury yields fell sharply yesterday on concerns that the economy could face a deeper recession next year, despite early signs of declining consumer inflation. Although data on Thursday showed that the PCE index, the Federal Reserve’s preferred measure of inflation, remains well above (6%) the Central Bank’s target range (2%).

In a speech in Thailand, European Central Bank President Lagarde said that central banks should work to get the Consumer Price Index back to target levels. But monetary policy is complicated by the uncertainty resulting from Russia’s invasion of Ukraine. Ms. Lagarde also added that the fiscal policies of some European governments may lead to excess demand and that fiscal and monetary policies must work in sync to ensure sustainable and balanced economic growth.

Oil prices traded mixed Thursday as worrisome US production data and uncertainty over the course of OPEC+ actions restrained the market. European Union governments have tentatively agreed to set a ceiling on Russian oil at $60 a barrel, which is also restraining oil bulls.

Gold hit a 5-month high on rising hopes of a slowdown in the pace of Fed rate hikes. Gold futures yesterday at $1,815.20 an ounce. Silver, which often follows gold, also rose sharply. The December through February period is a seasonally stronger time for precious metals, so there are many positives here.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) gained 0.92% on the day, Hong Kong’s Hang Seng (HK50) added 0.75%, and Australia’s S&P/ASX 200 (AU200) closed up 0.96%.

Bank of Japan Governor Kuroda indicated that a gradual slowdown in global rate increases and gradual growth of the global economy is expected. Global inflation is also expected to exceed the 2021 level in 2022 and then decline in 2023, a forecast that applies to Japan as well.

Reserve Bank of Australia Governor Lowe, speaking at an event in Thailand, pointed out that inflation expectations remain firmly entrenched. However, household spending in Australia is still resilient to higher interest rates. Lowe added that the Reserve Bank of Australia is trying to slow inflation without much negative impact on the economy. Still, this cycle of high rates will be longer than previous ones.