US equity markets surged to record levels overnight, following the release of key inflation data, which was benign. The key driver of Bond Yields have been fears over rising inflation and cost-of-living pressures and the US data released overnight was in line with expectations and well under control. Closer inspection reveals pressures are being counterbalanced and inflation is broadly under control. This sparked a relief rally in equities and allowed the US 10 year Bond Yields to drift lower. The US Dollar was also softer, allowing the EUR to regain 1.1900, while the Yen moved to 108.50.
The weaker reserve enabled a stabilsation of the commodity currencies, with the NZD pushing back to 0.7170, while the AUD traded up to 0.7715. NZ Credit card spending data was depressed, which may take pressure from todays inflation numbers, while Australian consumer confidence builds. The Australian Government has announced further measures to stimulate business, as welfare support is withdrawn from the system at the end of March and have also added a massive airfare subsidy to open up tourism and bail-out airlines.
A lot of positive news has encouraged investors back into equities, as vaccine roll-outs encourage economies to reopen.