Recently, the ten-year treasury yield has hit 1.766%, a high not seen since January 2020. This has led to a rise in traditional financial stocks while riskier equities have seen their prices drop. On Wednesday (1/12), Delta Airlines will report its Q4 earnings before the market opens. Analysts consensus is that Delta makes a $.12 profit per share and revenues to come in at around $9 billion. Compared to Q4 2020, that would be a 130% increase. The holiday season was significantly better for airlines compared to 2020 in passenger volume. However, airlines have also had to contend with staffing issues which have led to thousands of flight delays and cancellations. Increasing oil prices can also cut into bottom lines. Delta’s report will set the tone for the travel industry, so pay close attention.
On Friday (1/14), we will get a first taste of how some major financial institutions did in the last months of 2021 and their expectations for 2022. Again, with rising rates banks are once again a preferred buy for many investors. Blackrock (reporting on Friday) released an interesting 2022 Global Outlook which identifies some major trends they see happening. Firstly, they continue to believe in elevated levels of inflation. Rising inflation would certainly lead to a more hawkish FED which would continue to put riskier equities in an undesirable space.
In economic news, I am paying close attention to numerous reports. The December CPI report on Wednesday will likely give a reason for the Fed to remain hawkish with increases in rates and tapering. Jobless claims on Thursday (1/13) should continue to be low, however, with continued impacts from Omicron a surprise could occur. On Friday, we will see if American consumers remain confident with Michigan’s consumer sentiment number and retail sales numbers. Expect consumer discretionary stocks to be pretty heavily influenced by Friday reports. Volatility will certainly remain elevated for now.