Are Central Banks Tightening into a Slowdown?

What’s in Today’s Report:

• Bottom Line: Are Central Banks Tightening into a Slowdown?
• Weekly Economic Cheat Sheet: Is the Economy Losing Momentum?
• Weekly Market Preview: Santa Claus Rally Still Possible but Volatility is on the Rise

U.S. equity futures are sharply lower with global shares amid negative COVID headlines and surprise political drama in D.C.

Democratic Senator Joe Manchin unexpectedly rejected President Biden’s Build Back Better plan over the weekend, greatly reducing the odds of its passage which saw GS revise their Q1 growth outlook from 3% to 2%.

Meanwhile, in Europe, lockdown risks are on the rise as the spread of the Omicron variant of COVID-19 accelerates.

Looking into today’s session, it appears we are going to open deep in the red amid the combination of a deteriorating political landscape and surging Omicron fears.

There are no economic reports or Fed speakers on the calendar today however there is a 6-Month Treasury Bill auction at 11:30 a.m. ET, which is not something we typically monitor, but if we see a weak outcome, then short duration yields could spike higher, compounding last week’s fears of rate hikes beginning sooner than later which would weigh on stocks, potentially in a big way. Outside of that auction, markets will be focused on the Build Back Better headlines and the new prospects of tighter COVID restrictions, particularly in Europe as that would further weigh on the outlook for economic growth.