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US Fed eyes 3 rate Increases in 2022, slows stimulus in reaction to inflation. The taper pace is doubled from $15bn to $30bn/month, as expected. The market went from expecting 1 hike previously to 3 hikes now (the market assumed it would be 2 hikes, but is relieved it's not 4). The interest rate hike trajectory remains contingent on the economy. The aggregate 2022-2024 dot plot only went up by 1 hike. The Fed still expects the surge in inflation to come down, as greatly affected by the pandemic. Markets reacted overall well with major US indices gaining 0.8%-2% with those stocks particularly hurt in previous sessions rebounding. While the US tapering environment is not particularly positive for markets, they are rallying on the relief of not receiving the worst news. Investors positioning going into the meeting has been much more defensive lately and market sentiment is starting to strike a more positive tone. Perhaps investors will shift their eyes onto earnings again, which is what usually drives markets.  

Bloomberg survey of 106 asset managers finds Fed policy mistake seen as biggest risk facing stocks. Persistent high inflation and threats of new variants come close after. Investors will be watching the Fed and inflation numbers closely. In the meantime, momentum for stocks is challenged, besides the defensive sectors which have done well recently. 

With its market cap coming closer to $3 trillion, Apple solidifies its unique status of being the most valuable listed company in the world. Apple is surfing on investors rushing to stocks with earnings stability, strong balance sheets, a high profitability, and of course being an iconic global brand helps. Apple shares have gained recently on an improving robust fundamental story going into 2022, rounded up with some positive upwards target price revision from analysts. The stock's technicals point to a RSI of 78, suggesting the stock is in overbought territory. The stock is +1.25% pre-market at $181.7. 

U.S. 2 year Treasury yields dropped to 0.69%, following U.S. inflation data for November meeting close to expectations at +0.8% versus 0.7% expected. (ex food & energy +0.5%, meeting consensus Similarly, amount of 2022 Fed hiking priced in by swaps slipped after inflation data. This key inflation data comes as a relief after a lot of stress in risky assets particularly sensitive to inflation and to a faster tightening by the US Federal Reserve. Nasdaq-100 is soaring +0.9% pre-market. 

Real yields are threatening to break higher, pressuring stocks and other risky assets. The market is attempting to re-price a less accommodative Fed, and modestly higher interest rates in the years to come. Investors will be watching closely next week's Fed meeting. Volatility has picked up for risky assets, as investors brace for pressure on high-valuation assets with discounted cash-flows far out in the future. The recent market selloff in high-growth stocks suggests investors are particularly sensitive to a slight rise in yields, as seen over again several times this year.