MORNING BID-More than four

A look at the day ahead from Sujata Rao. The world's largest economy is predicted to record GDP growth at a 37-year high of 5.5%, with data due later on Thursday.

A look at the day ahead from Sujata Rao. The world's largest economy is predicted to record GDP growth at a 37-year high of 5.5%, with data due later on Thursday. Some such as JPMorgan reckons the figure could be as high as 7.5%. We will also likely see weekly jobless benefits claims dropping further.

That, in a nutshell, is why the U.S. Federal Reserve feels there is "quite a bit of room to raise interest rates". Could there be more than four rate rises this year? Powell did not deny that possibility, so markets have started to price the fifth move.

Accordingly, Treasury two-year borrowing costs hit 23-month highs, shrinking the gap with 10-year yields. And on t-bills, the shortest-dated debt segment, Tradeweb notes a sharp steepening, with the gap between the three- and six-month yields at the steepest since 2015, and more than double from a month-ago period. Similar steepening is notable between other bill maturities in a sign more tightening is being priced.

So the stock market selloff that had abated pre-Fed is back in full swing, with world stocks down 0.6%; European and Wall Street looking set for another tumble. But if buyers are running scared, there are bargain hunters of a different sort -- billionaire William Ackman https://www.msn.com/en-ca/money/other/ackmans-pershing-square-takes-new-position-in-netflix/ar-AATbfQq said he had snapped up $1 billion worth of Netflix shares since last Thursday's market tumble.

Companies, meanwhile, continue to deliver good news; Tesla for instance predicted 50%-plus growth this year, while Deutsche Bank posted its biggest profit since 2011. But with buyers still in hiding, Tesla shares tanked in after-hours trade. Key developments that should provide more direction to markets on Thursday: -China's industrial firms saw December profits grow at the slowest pace in 1-1/2 years -German consumer morale improves slightly -New Zealand inflation at three-decade high -South Africa expected to raise rates by 25 bps -U.S. durable goods/advance Q4 GDP reading/initial jobless claims -U.S. 7-year note auction -U.S earnings: Blackstone, Dow chemicals, Southwest Airlines, McDonald's T Rowe Price, Mastercard, JetBlue, Apple, Visa, Mondelez, -European earnings: LVMH Moet Hennessy Louis Vuitton, Dr. Martens, UniCredit Britvic, St. James's Place STMicroelectronics, SAP, Deutsche Bank, IG Group, Diageo, Sabadell, SEB, Polymetal

 

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