Spread of Omicron variant raising risks of severe restrictions – Societe Generale

"The explosive spread of the Omicron-variant of COVID is raising the risks of more severe restrictions," note Societe Generale Analysts. "These would once again depress economic activity, but much depends on how many people develop severe symptoms."

Key quotes

"Reliable evidence will take some weeks to emerge. That said, what is evident is that in the face of rampant inflation and the clear evidence that successive waves of restrictions have less and less of an impact on the economy, many central banks have finally woken up."

"The resulting pattern is increasingly looking like the most abrupt policy shift in monetary policy history - from outright easing to outright tightening in a single moment. The data calendar is thin, but not without stars such as US income and consumption data and durable goods orders - both of which are likely to be firm."

"The FOMC meeting results were in line with expectations and very much so with policy forecasts for the next few years. Ultimately, however, realized policy depends on the course of the economy. Household spending is recovering but confidence remains weak, and normalisation looks distant."