Panic Is Far More Terrible Than the Infection Itself

Summary:

According to an announcement in the early morning of last night, the "China’s Travel Code" will be officially offline on 13th November, which means that no one will care wherever you have been anymore. It basically announces that the pandemic that has lasted for 3 years has finally come to an end. There is a widely circulated joke recently, "We used to stock up on vegetables for a sudden lockdown, but now we hoard medicines to prevent fevers." Although it is crosstalk, it truly reflects people's mentality. Perhaps the panic is far more frightening than COVID-19 itself!

Phenomena After the Release of COVID-19

China's Covid-19 restrictions have been lifted recently. However, everyone does not seem to have become as relaxed and happy as they had hoped but displayed great nervousness instead. This is mainly because the current virus is too contagious, especially in Hebei, which was the first to be released.

As we all know, foreign countries have been lying flat for a long time. Almost everyone has tested positive or even several times. It suggests that the virus is much weaker now than in 2020, and the symptoms are indeed relatively mild, but it is still more harmful to the elderly with underlying diseases. The point is that we have no experience to handle this matter on our own. Videos of medical- overstretched have also appeared in WeChat groups recently, which may have occurred in more places. All above is totally not the virus itself, but the weakness of human nature. In the past, it was the state that kept us away from the virus, but now after opening up, the virus is getting closer to us, which can happen to each of us at any time.

Therefore, the panic began to spread instead. People who didn't want to take a nucleic acid test before are now looking for nucleic acid detection points everywhere to check if they are affected. Even some mild symptoms such as cough and headache will make us deeply doubt whether we are infected or not, and even start taking medicine like crazy! Anti-pandemic and medical materials that were previously neglected by us are now stored as treasures. Related drugs, such as the miracle drugs ‘’Lianhua Qingwen Capsules’’ and ’’Ibuprofen’’ promoted by pharmacies and the Internet, are too hard to be found. However, patients who are genuinely infected or have a common cold may not even be able to buy medicine. Therefore, it is not the virus, but humanity is scary!

Human Weaknesses Never Goes Out of Style

Trading and life are actually the same. Humanity can have a great impact on our decision-making, especially when we are in trouble. In the face of the pandemic, we will stock up on medicine and vegetables in panic! While in trading, we will chase the market! To overcome humanity, you must respect laws and science, which is back to the scope of cognition.

Take viruses as an example, in the theory of virological transmission, viruses will undergo a process from strong virulence with weak transmission to weak toxicity with the strong transmission. When Wuhan was unblocked previously, all of us may think that the good days of freedom have returned. But looking back now, it is still too early to be happy.

In survivor theory, everyone thinks they'll be the lucky ones. No one believes that the disaster that befalls others will happen to them, or take it easy until it happens, which is another phenomenon, panic. The same is true of trading, the fluke mentality will always exist when there is a small loss, considering that the price will come back. As the loss is getting greater, panic reveals, and then any decision will be irrational.

On the contrary, when we are about to truly regain our good freedom, we will get caught up in the painful experience of the past and lose the courage to believe that real change has come, which is called cognitive bias. Now that the pandemic has been released, it has begun to fall into self-doubt and panic again. And for trading, most people will make a stop-loss strategy after experiencing large losses. As the deficits gradually shrink subsequently, they miss the real trend afterwards perfectly.

No secret can be hidden in the sun, and humanity is immutable.

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Comments

Add to Favorites

Samantha Luan

Forex

USD: How long does policy need to stay tight?

A pivotal week for FX and global asset markets lies ahead of us. The week will play a major role in determining whether central banks (particularly the Federal Reserve) need to keep policy tighter for longer, or can (as the market prices) start to relax a little over inflation and can consider rate cuts in the second half of next year to ensure a soft landing. The two key event risks here are tomorrow's US November CPI reading and Wednesday's FOMC meeting - including the release of a fresh set of dot plots.

Going into these event risks the market is pricing the Fed tightening cycle peaking in the 4.90/5.00% area next spring and then 50bp of rate cuts being delivered in the second half. And consensus is for another relatively soft 0.3% month-on-month core CPI release tomorrow, which would tend to support the market's pricing. We look at a range of Fed scenarios in our FOMC preview. As noted previously here, December is typically a soft month for the dollar and probably a more dovish set out of outcomes and a weaker dollar does the most damage to positioning, which is probably still long dollars.

However, we do feel that market consensus still underappreciates the risk of inflation staying higher longer and also is dangerously second-guessing the Fed in terms of 2H23 rate cuts. The Fed has said that it feels there is good forward guidance value in its dot plots and it may choose to get across its current message of tight policy staying in place for longer through those dot plots. Our rates team also sees upside risks to US 10-year yields from the 3.50% area, with outside risk to the Fed discussing outright US Treasury sales (rather than just roll-offs) if it does think the long end of the curve is too stimulative. Notably, the correlation between US 10-year yields and G10 dollar crosses has picked up substantially since the soft October CPI release on 10 November. The long end of the curve is therefore going to be a key battleground for the dollar.

Event risks this week will therefore determine whether 2023 starts with a focus on the inflation battle being won and the prospect of stimulative, reflationary policy coming through - a dollar negative. Or whether sticky inflation ties the hands of central bankers, the US yield curve remains steeply inverted and the dollar continues to perform well in a challenging risk environment. We do see the latter scenario as more likely, but this week should certainly give one of the scenarios a big lift.

There is very little on the US calendar today and we would expect DXY to go into tomorrow's CPI release near its current 105 levels.

EUR: A big week for central bank meetings in Europe

This week sees central bank meetings in the eurozone, Switzerland and Norway, where 50bp hikes are expected in the former two and a 25bp hike in the latter. Please see our full European Central Bank preview here and our Swiss National Bank preview here. On the former, we note there is still a slight risk of the ECB doing 75bp rather than 50bp - which would probably help the euro. But this of course comes after the US CPI/FOMC risk. Given the 10% EUR/USD correction off the late September lows, our preference would be that EUR/USD struggles to hold any gains over 1.06 this week and could end the week lower should US events oblige.

GBP: BoE to hike 50bp this week

This week's highlight will be the Bank of England meeting on Thursday. Please see our full preview here. We expect the BoE to revert to a 50bp hike (55bp hike priced) as it tries to balance high inflation against growing evidence of a prolonged downturn - with little signs of stimulus.

Our game plan assumes that GBP/USD struggles to hold any gains over 1.23, while EUR/GBP should find support in the 0.85/0.86 area. A winter of discontent should see sterling underperform should central bankers need to keep rates tight(er) into a recession.

CEE: Asymmetric response to global developments

A busy week at the global level will be accompanied by several data points from the Central and Eastern Europe region. This week's headline number will be November inflation in the Czech Republic. We expect inflation to accelerate from 15.1% to 15.9% year-on-year, slightly above market expectations. The number will have the market's attention not only because of the Czech National Bank meeting next week but also because of the surprising slowdown in inflation in October when government measures against high energy prices came into play. After this number, we can then expect more headlines coming from the CNB given Thursday's start of the blackout period.

Also today, Hungary's assessment is expected to be discussed at the European Council level. However, early rumours suggest that the European Commission's conclusion remains unchanged. November inflation in Romania will be published on Tuesday. We expect an increase from 15.3% to 16.6%, above market expectations. Although we have already seen inflation slowing in previous months, this result would thus raise the peak again. We do not expect another rate hike from the National Bank of Romania in January, but either way, it will be a close call, and tomorrow's number could be key. In the second half of the week, we will then see secondary data across the region such as the current account balances in Poland and the Czech Republic and the final inflation estimate in Poland, including the core number.

In the FX market, this week we will be watching the impact of global events on the region. Our baseline scenario of a stable EUR/USD should not bring too much change for the region, but risks both ways are significant and higher volatility compared to previous rather quiet weeks in the CEE FX market can be expected. As we mentioned earlier, interest rate differentials have fallen significantly over the past weeks in the region leaving FX vulnerable to global shocks. Also, the gas story is creeping back and with higher gas prices we see growing signs of a renewed relationship with FX. The region's reaction would thus be asymmetric in the direction of weaker FX in our view, if the US dollar ends up as a winner this week.

The Hungarian Forint will be following a separate story in addition to the EU developments and the newly lifted fuel caps. Given the negative rumours, more pain for the forint can be expected and the question is whether EUR/HUF will make another march towards the 430 level as it did in October, which led the central bank to an emergency rate hike in the middle of that month. In our view, the long positioning has fully unwound, and the market is leaning towards the short side again, but we don't think that the negative outcome of the EU story is fully priced in, so it is likely that we will test new highs this week.

Source: ING

Risk Warnings and Disclaimers

Comments

Add to Favorites

Cohen

Central Bank

The opening of a new front in the European Central Bank's fight with runaway inflation will bring with it bargaining over the path for interest rates — resulting in a potentially smaller hike this week.

Alongside its decision on borrowing costs, the ECB is set to announce how it plans to unwind €5 trillion (US$5.3 trillion) of bonds purchased during past stimulus pushes, adding more bite to the 200 basis points of rate increases to date.

Hawks on the 25-member Governing Council are eager to commence the process, called quantitative tightening. Their dovish colleagues, who fret about an impending recession, may use that determination as leverage to secure more modest rate moves. Economists predict a half-point step on Thursday after 75-basis-point increments at each of the last two meetings.

It wouldn't be the first such compromise. As recently as July, the ECB unveiled a bigger-than-expected rate increase while presenting a new tool to calm the bond markets of indebted euro-zone nations as monetary aid is withdrawn.

The stakes now are higher. While inflation may be peaking, the deposit rate, at 1.5%, is approaching levels that risk further damage to the fragile economy. What's more, QT is uncharted territory for both the ECB and European markets.

"Lately, the more hawkish faction of the Governing Council has been less strident in seeking a harsher tightening," said Birgit Henseler, a strategist at DZ Bank in Frankfurt. "In return for what's likely to be a less aggressive rate hike, the policymakers may well decide to stop the full reinvestment of cash flows under the Asset Purchase Program with effect from March."

Lithuania's Gediminas Simkus and Latvia's Martins Kazaks, two of this year's most outspoken ECB hawks, have left the door open for a smaller rate move, hinting at a tradeoff between balance-sheet reduction and the pace of hikes.

If the range of instruments is broadened, "then perhaps the rate increase can step down at some point," Kazaks said in November.

France's Francois Villeroy de Galhau has said openly that he prefers a half-point increase. Chief economist Philip Lane has signaled a similar view, saying "a lot has been done already" and the "starting point is different now."

After December, economists surveyed by Bloomberg predict another 50-basis-point hike in February — taking the deposit rate to a 2.5% peak. They see the ECB starting to offload bonds under QT in the first quarter.

Exactly how that will happen isn't entirely clear, beyond a preference by a broad majority of officials for allowing maturing debt to roll off, rather than implementing outright sales. President Christine Lagarde has pledged a "measured and predictable" approach.

But it's the precise design of QT — particularly its timing and speed — where the room for conflict is largest. The experience of the Federal Reserve and the Bank of England offers only limited guidance as the ECB needs a strategy that will work across a bloc of 19 — soon to be 20 — divergent countries.

Despite a push by Bundesbank chief Joachim Nagel to fully halt reinvestments of maturing debt under the APP by March, caution appears to be the watchword.

Even his hawkish colleague Klaas Knot from the Netherlands, for instance, wants an "early but partial stop to reinvestments, to test the waters before calibrating the ultimate pace of the rolloff."

Much will depend on how the economy withstands the winter energy squeeze. Fresh forecasts this week will offer pointers on how households and firms may cope. But the high uncertainty that persists may assuage even the toughest policymakers.

"Lots of criticism from the hawks was based on quantitative easing," said Martin Wolburg, an economist at Generali Investments. "Embarking on QT will address some of their concerns. They'll put more emphasis on this and adopt a more relaxed stance on rates."

Source: Bloomberg

Risk Warnings and Disclaimers

Comments

Add to Favorites

Devin

Economic

Central Bank

Bank of England Preview – Back to 50bp as BoE Nears End of Hiking Cycle

· We expect the Bank of England (BoE) to hike the Bank Rate by 50bp on Thursday.

· We still expect the Bank Rate to peak at 3.75% in February 2023.

· A slightly dovish BoE and a hawkish ECB should send EUR/GBP higher during the day.

BoE call

We expect the Bank of England (BoE) to hike the Bank Rate by 50bp on 16 December bringing it to 3.50%. Markets are currently pricing slightly above 50bp for the meeting next week (55bp). As a result of a more balanced fiscal policy, market conditions have cooled off and broadly returned to conditions we saw prior to the mini-budget. We thus expect a return to slower hiking pace.

Bank of England Preview – Back to 50bp as BoE Nears End of Hiking Cycle_1

We expect the Bank to return to its more dovish stance as recession risks are becoming more pronounced and the growth outlook is increasingly becoming weaker. This was highlighted by the MPC's latest projections, which described a very challenging outlook for the UK economy, where it now expects the UK "to be in a recession for a prolonged period." The BoE's November Decision Maker Panel also shows that broad inflation expectations dropped with participants expecting CPI inflation to be 7.2% one-year ahead, down from 7.6% in the October survey. Additionally, the BoE tends to ear on the side of caution, why we expect the return to a 50bp hike.

Bank of England Preview – Back to 50bp as BoE Nears End of Hiking Cycle_2

We keep the rest of our forecast unchanged, expecting a final 25bp hike in February 2023, which is fewer hikes than priced in markets (currently 160bp until August 2023). If inflation pressures persist and/or the economy surprises on the upside we see a case for an additional rate hike in March 2023.

We expect no news regarding QT-communication and expect the BoE to continue reducing the government bond holdings by a total of 80bn by November 2023.

Growth outlook

The UK economy held up during the first half of 2022, but the Q3 GDP figure marked in our view an official start of the recession as the economy is likely to weaken further. We expect the economy to contract for four consecutive quarters and growth not to return until the Q4 2023. We now see the economy contracting by 0.7% in 2023 followed by a modest 0.8% growth in 2024. The labour market remains tight with high wage pressure although we are seeing the first signs of easing as unfilled vacancies have returned to pre-pandemic levels. On fiscal policy, the increased focus from the new government led by PM Rishi Sunak on closing the fiscal gap was broadly confirmed by the governments Autumn Statement on 17 November.

FX

In our base case of a 50bp hike, we expect EUR/GBP to move slightly higher on announcement. In its statement we expect the BoE to highlight the dire state of the UK economy lending support to our call that market pricing is too aggressive currently pricing a peak in the Bank Rate at 4.60% by August 2023. Combined with the expectation of a hawkish 50bp hike by the ECB later in the afternoon, we expect EUR/GBP to move further higher during the afternoon, ending the day ½ figure higher

Source: Danske Bank

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Comments

Add to Favorites

Cohen

Central Bank

For a good part of this month, European and U.S. markets have seen their progress off their lows in October come to a halt, as we come to the end of the year, and ahead of three big central bank meetings later this week.

European markets posted their first significant weekly loss since October, as did markets in the U.S., with the Dow similarly posting its worst week since September, as concerns over a slowing economy and the future pace of interest rates rises weighed on sentiment.

This late Friday slide in the U.S. looks set to weigh on today's European open.

For most of the last few weeks there has been widespread anticipation that we may well have seen peak inflation in the U.S., as well as peak U.S. dollar. Recent economic data from the U.S. services sector as well as wages data has thrown this calculation into some doubt, along with the recent sharp drop in temperatures, which is exerting upward pressure on gas prices.

Friday's U.S. PPI numbers saw November inflation come in higher than expected at 7.4%. While there was some disappointment that this was above the 7.2% forecast it was still a sizeable fall from the 8.1% seen in October. More importantly we also saw core prices fall back from 6.8% to 6.2%, the lowest level since July 2021, and over 3% below the peaks this year.

This so-called “miss” saw U.S. bond yields close the week off their lows, and also higher on the week for the first time in over 4 weeks. While disappointing for the peak inflation narrative, Friday's numbers don't change that much. Just because the speed of the slowdown is not as big as expected, it still doesn't change the direction of travel, and with crude oil prices now in negative territory for the year, sometimes it's more about the destination than the speed with which you get there, something that markets occasionally overlook.

Nonetheless the focus this week will remain on inflation, not just in the US, but also in the UK, as we gear up for the final rate decisions of the year from the Federal Reserve, and the Bank of England, as well as the European Central Bank thrown in for good measure.

In fact, we have an absolute avalanche of data announcements this week not only from the U.S., but also the UK, starting today with the latest monthly GDP numbers for October, as well as industrial and manufacturing production numbers, which are expected to show that the UK economy is in a poor state of health, despite low levels of unemployment.

In September, UK GDP slumped by -0.6% on a monthly basis, as consumers hunkered down ahead of the October energy price cap, as well as the funeral of Queen Elizabeth II. Index of services is expected to lead the rebound in economic activity, with a rise of 0.5%, after the -0.8% contraction seen in September. On a rolling 3M basis, the economy is expected to contract by -0.4%.

Today's October numbers should see some of that reversed to the tune of 0.4%, however both industrial production and manufacturing are expected to remain subdued, with industrial production expected to come in at 0%, and manufacturing production set to contract by -0.2%.

This week's UK data will present the Bank of England with a huge problem later this week in terms of the size of this week's rate hike, albeit one partially of their own making due to being asleep at the wheel a year ago. With economic activity slowing due to a weakening economy and high inflation the bank will have to decide between a 50bps or a 25bps rate hike, in the full knowledge that in being seen to be weak on their core mandate, could invite speculation that they aren't serious about bearing down on prices, especially with wage inflation above 6% and set to go higher, in data due to be released tomorrow.

EUR/USD – had another failed attempt at the 1.0600 area last week. A move above 1.0620 targets the potential for a move towards 1.0800. Below 1.0400 targets the 1.0340 area and 200-day SMA.

GBP/USD – slipped back from the 1.2320 area at the end of last week. Currently have support around the 200-day SMA at 1.2110. A concerted move through 1 2300 targets the 1.2750 area. A move through the 1.2040 area could see further weakness towards the 1.1985 area on a move below the 200-day SMA.

EUR/GBP – slipped back to the 0.8560 area last week with short term support at the just above the 200-day SMA and the 0.8540 area. Below 0.8530 targets 0.8480. Above 0.8675 targets 0.8720.

USD/JPY – ran out of steam just shy of the 138.00 area last week, keeping bias towards the downside. Rebounded from the 135.60 area with support at the 200-day SMA at 135.05. A break below 200-day SMA retargets the lows at 133.60.

Source: CMC

Risk Warnings and Disclaimers

Comments

Add to Favorites

Thomas

Economic

Southeast Asia's markets will move in a way similar to that of a "bungee jump" in 2023, plunging before surging in the second half of the year, according to JPMorgan analysts.

That's likely to be characterized by a "sharp fall followed by a rapid increase in altitude (bear market rally) followed by another decline until eventually markets come to rest at rock-bottom," analysts led by Rajiv Batra wrote in a report. They attributed that to weakened purchasing power in light of monetary policy tightening, lower savings and the higher cost of borrowing.

JPMorgan expects the MSCI ASEAN Index to "re-test this year's lows and potentially move even lower" in the first half of 2023, weighed down by weaker external demand, tightening financial conditions, and a "fading" reopening boost, among other factors.

The MSCI ASEAN Index fell 22% from February's high to the year's lowest in October. The index subsequently rebounded 10%, buoyed by hopes of China reopening and a pivot from the U.S. Federal Reserve.

The index measures large and mid-cap stock performance across four emerging markets, one developed market and one frontier market. In total, it comprises 170 constituents across Singapore, Indonesia, Malaysia, Philippines, Thailand and Vietnam.

Trade-oriented economies

Fed interest rates are expected to reach 5% by May, and a U.S. recession is expected at the end of the year.

But "contrary to investors' belief, the equity market has failed to fully price in a recession until it happens," the report said.

Trade-oriented economies like Singapore, Thailand, Vietnam and Malaysia will be especially affected by the slower global growth to come and weaker demand for durable consumer goods.

On top of that, China's expected relaxation of Covid restrictions is unlikely to offset the forecast plunge.

The Thai economy, for example, is expected to be hit by a "significant decline" in exports, private investments and manufacturing, with JPMorgan analysts downgrading their 2023 gross domestic product growth forecast from 3.3% to 2.7%.

Singapore is also expected to face more challenging macroeconomic conditions.

"We expect that the weakening in external demand will continue to slow [Singapore's] goods producing sector even as the services sector provides some offset."

Singapore's upcoming goods and services tax hike — from 7% to 8% — would also dampen demand and consumer sector outlook, JPMorgan said.

China's reopening

China's "reopening impulse" is also estimated to be modest given global recessionary conditions.

Mainland China relaxed many of its stringent Covid controls in the past week, with national authorities announcing a slew of sweeping changes such as ease of travel domestically, keeping businesses operating and allowing Covid patients to quarantine at home.

"The benefits from China's reopening will be offset by recessions in the developed markets," JPMorgan analysts told CNBC, adding that Southeast Asian markets have high exposure to exports and demand from the economies of developed markets.

But China's reopening to international travel, if it happens, would be a "positive catalyst" for Singapore's economy. Chinese tourists accounted for around 20% of Singapore's tourist arrivals in 2019, whose return could also "generate knock-on impacts on [Singapore's] consumption and travel-related services sector."

Nevertheless, JPMorgan estimates that the uptick will still likely be limited by the aforementioned global recessionary conditions and external demand challenges that the country faces.

A full border reopening from China would also add "potential upside" for Thailand's tourism recovery, and that could be inflationary, according to the report.

"There is an argument that China's earlier-than-expected border reopening is inflationary," JPMorgan said. Nevertheless, while tourism may stimulate wage gains and consumption, it is not tightly correlated with inflation in countries like Thailand, where the nature of inflation is primarily supply-driven, the analysts added.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Comments

Add to Favorites

Samantha Luan

Stocks

Asian shares slumped and the dollar firmed on Monday at the start of a hectic week, as markets awaited a flurry of interest rate decisions from the U.S. Federal Reserve, the European Central Bank and others.

The caution is expected to spill over onto European markets, with the pan-region Euro Stoxx 50 futures down 0.5%, German DAX futures losing 0.5%, and FTSE futures 0.2% lower.

Both the S&P 500 futures and Nasdaq futures dipped 0.1%.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan slumped 1.2%, erasing almost all of the previous week's gains stemming from optimism that China is finally opening up its economy with the dismantling of its zero-COVID policy.

Japan's Nikkei eased 0.2%.

Chinese bluechips dropped 0.9%, while Hong Kong's Hang Seng index was down 2.2%, as investors' focus shifted away from crippling COVID-19 curbs to the surge in infections that is now disrupting the economy.

On Friday, Wall Street dropped, Treasury yields advanced and the dollar pared earlier losses.

A U.S. consumer price index (CPI) report on Tuesday will set the tone for markets for the week. Economists expect core annual inflation to ease to 6.1% in November, compared with a rise of 6.3% seen in the previous month.

Risk could be on the upside, after data on Friday showed producer prices had increased faster than expected, fuelling concerns the CPI report may indicate inflation is sticky and interest rates may have to stay higher for longer.

"A hotter CPI – say 6.4% (and above) and a hawkish set of dots from the Fed and statement from Powell could see funds call it a day for 2022 – risk bleeds into 2023 and funds buy back USD shorts," said Chris Weston, head of research at Pepperstone.

"It would be a big surprise if we didn't see the Fed step down to a 50bp hike .... We also want to understand if Jay Powell opens the door to a slowdown to a 25bp hiking pace from February - again, while in line with market pricing, this could be taken that we're closer to the end of the hiking cycle and is a modest USD negative."

The Federal Reserve is widely expected to raise rates by 50 basis points on Wednesday at its last meeting of 2022, though focus will also be on the central bank's updated economic projections and Fed Chair Jerome Powell's press conference.

Kevin Cummins, chief U.S. economist at NatWest, said any surprise in the CPI report was unlikely to shift the Fed from a 50-basis-point rate hike, although it would play a bigger role in the policy statement and the tone of Powell's press conference.

"As is often the case, the updated dot plot and terminal (peak) rate estimates will be even more critical to the policy outlook than the near-term action this week - a theme Chair Powell will focus on in his prepared remarks and press conference," Cummins said.

In addition to the Fed, the ECB and the Bank of England are also set to announce interest rate hikes on Thursday with both likely to hike by 50 basis points, as policymakers continue to put the brakes on growth to curb inflation.

In currency markets, the U.S. dollar drifted 0.1% higher against a basket of currencies to 105.17, although it was not too far away from the five-month trough of 104.1 a week ago.

Sterling fell 0.3% to $1.223, while the Australian dollar also slipped 0.3% to $0.6759.

Treasury yields held largely steady on Monday. The yield on benchmark 10-year Treasury notes held at 3.5600%, compared with its U.S. close of 3.5670%. The two-year yield touched 4.338%, up slightly from its U.S. close of 4.330%.

In the oil market, prices rose on uncertainty over the restart of a key pipeline supplying the United States and the threat from Russia to cut production in retaliation for a Western price cap on its exports.

Brent crude futures were up 0.6% to $76.58 a barrel while U.S. West Texas Intermediate crude was at $71.62 a barrel, up 0.8%.

Spot gold was 0.6% lower at $1,785.78 per ounce.