Facing the most severe inflation situation in decades, the Fed announced that it would end its asset purchase plan ahead of schedule, and hinted that it is inclined to raise interest rates faster than expected in 2022. The Federal Reserve announced on Wednesday that it will reduce monthly purchases of U.S. Treasury bonds and mortgage-backed securities (MBS) by $30 billion, which is twice the amount before. Based on this, the asset purchase plan is expected to be early next year instead of the middle of the year. Finish. On Thursday, the Fed kept its benchmark interest rate unchanged. The dot plot released at the same time as the policy statement shows that from the median estimate, Fed officials believe that three interest rate hikes of 25 basis points each next year will be appropriate.

US retail sales growth in November was lower than expected, indicating that consumers are suppressing shopping in the context of the highest inflation rate in decades. Data from the US Department of Commerce on Wednesday showed that overall retail sales in November increased by 0.3%, the lowest increase in four months; the October data was revised upward to an increase of 1.8%. Excluding gasoline and automobiles, sales rose 0.2% in November. The above figures have not been adjusted for inflation.

The New York State Manufacturing Index increased more-than-expected in December, and strong order growth led to an increase in backlogs. Data released on Wednesday showed that the Federal Reserve Bank of New York Manufacturing Survey Index rose 1 point to 31.9. The value above zero indicates that economic activity is expanding. The median estimate of economists in a Bloomberg survey was 25. The report showed that inflation fell slightly, while other indicators remained high. A measure of the price paid for raw materials fell to 80.2. The indicator measuring the price of raw materials received fell 6.2 points from a record high to 44.6.

The latest data from the U.S. Treasury Department shows that foreign holdings of U.S. Treasury bonds rose to a record high of 7.65 trillion U.S. dollars in November. The total foreign holdings of US Treasury bonds in November increased by US$99.6 billion from October. Japan’s holdings of US Treasury bonds increased by US$20.8 billion to US$1.32 trillion, a record high. China's holdings of U.S. Treasury bonds increased by US$17.8 billion to US$1.065 trillion

According to the International Monetary Fund (IMF), global debt soared to a record US$226 trillion last year. As interest rates rise, it has raised concerns about debt sustainability. IMF officials said in a report on Wednesday that faster-than-expected interest rate hikes may put pressure on highly indebted countries and force governments and companies to reduce debt and expenditures, harming economic growth. They quoted the IMF's latest global debt database as saying that the global debt/GDP ratio rose by 28 percentage points in 2020 to reach 256%, the largest increase since World War II.

Canadian consumer price inflation in November remained at the highest level in nearly two decades, continuing to put pressure on the Bank of Canada to quickly initiate interest rate hikes. Data released by Statistics Canada in Ottawa on Wednesday showed that the CPI rose by 4.7% year-on-year in November, tying the highest level since 2003, in line with economists' expectations; the month-on-month increase was 0.2%. As the bottleneck of the global supply chain pushes up prices, the inflation rate has exceeded the control range of the Bank of Canada of 1% to 3% for eight consecutive months. Wednesday’s inflation report will strengthen expectations that the Bank of Canada will initiate an interest rate hike cycle early next year. The market expects to raise interest rates five times next year.

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