Higher risk and lower returns. Welcome to the new year

On Monday, the dollar halted some of Friday's losses on speculation that inflation data and several Federal Reserve officials' tone would support a rate hike but still remains below 96.

Four rate hikes are likely this year

This year, the Federal Reserve will likely raise interest rates four times, and it will likely begin its balance sheet run-off process in July. The U.S. labour market is showing signs of rapid progress, and the minutes of the Fed's Open Market Committee last week provide optimism about a return to normality.

Worldwide bond market spike

As investors prepare for the first Federal Reserve rate hike since the pre-pandemic era, bond yields are rising globally in tandem with Treasury yields. Despite a rising omicron outbreak in Australia that's already pushing analysts to further lower their estimates, the nation's bond market is busy selling off, even as it's being cited as the third-weakest developed economy this year.

Oil began 2022 with the biggest weekly gain

Following the biggest weekly gain in a month, oil prices remained steady as supplies returned to Libya and Kazakhstan, and investors tracked China's response to its first spread of the omicron virus. Last week, Brent crude rose more than 5% to $83 a barrel, the highest since late November. The Libyan oil sector saw production rise to 900,000 barrels a day after maintenance, while some Kazakhstani oil production was restored after unrest the previous week cut supplies.

Events of the week

This week, euro area unemployment and wholesale inventories data will be released. The week ahead will also feature several key inflation reports from China, the U.S., and Europe. In addition, there will be the nomination hearing of Fed Chairman Jerome Powell before a Senate panel on Tuesday. In addition, the nomination hearing for Fed Governor Lael Brainard for the role of vice-chair is on Thursday.

Among other things, this week marks the beginning of the fourth-quarter earnings reports from major banks such as JPMorgan Chase, Citigroup, and Wells Fargo, which will be published on Friday. Stocks in the technology sector may gain attention again after the Nasdaq 100 shed 4.5% this week, the most significant drop since February 2021.