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Money seems to grow on trees: once again, online shopping during Black Friday in the United States set a new record.
This time, the figure was 9.8 billion dollars, an increase of 7.5% over the previous year. Cyber Monday sales did not disappoint either, reaching $12 billion.
Overall, there are no apparent signs of the economic crisis that analysts have been predicting for more than a year. Does this mean that we will not see a landing after all?
It might and it might not.
While sustained consumer demand is generally positive, as it reduces the risk of recession, it could complicate the Federal Reserve’s efforts to reach its 2% inflation target.
As a result, although the interest rate hiking cycle has ended, interest rates may remain elevated for longer than expected, posing new risks for the future.
If interest rates remain high for a prolonged period, this could prevent companies from taking on more debt, affecting their long-term profitability.
In addition, there could be an increase in corporate defaults and bankruptcies as high-interest rates affect US companies. In other words, everything is as we like it.
However, judging by the volume indicator data, investors do not seem concerned about risks, focusing more on the possibility of a change in monetary policy than on future risks.
Against this backdrop, there has been a rapid sell-off in DXY, whereas interest in fixed income has increased, with junk bonds attracting $11.4 billion worth of investment.
The question now is: what could dampen investors’ enthusiasm?
In addition to the risks mentioned above, geopolitics could disrupt the uptrend. In particular, increased pirate attacks could disrupt the supply chain first and then the markets.
On the other hand, if OPEC+ decides to cut its oil production above planned levels, thus triggering a further commodity rally, optimism could diminish.
Finally, the epidemiological situation in China following an outbreak of acute respiratory infection needs to be monitored. Sounds familiar, doesn’t it?
China’s National Health Commission says it is influenza, adenovirus, or mycoplasmal pneumonia, but it may be the beginning of the next pandemic…
