Daily Market Commentary 12th July 2021

Markets rebounded strongly overnight, overwhelming the previous trading sessions losses and more! The sheer magnitude of the Fiscal and Monetary stimulus prevails. Markets had baulked in the previous session, due to fears of further lockdowns, following the latest virus outbreak. Perhaps the markets have woken up to the straw man that has been parading across the world? The overwhelming and ominous fiscal and monetary largesse is continuing to have an impact, while debt and deficit is ignored. The only inhibitor is inflation.

A plethora of economic data, will be on full show this coming week, but all eyes will be focused on inflation/CPI numbers across the globe. Economic statistics have been thoroughly manipulated, to ignore serious consideration, but the trend does not lie. CPI/PPI numbers from Europe. Asia and the USA will be released in the coming week and this may shock markets. The sanitised numbers are bad enough, with the US hitting 5% inflation, but reality is in the hip pocket. People are not stupid and the reality hits like a sledge hammer. Headline taxes may not increase by much, but the most painful taxes happen and this is in the form of cost-of-living.

The NZD bounced back, with market confidence trading 0.6990, while the AUD looked to regain 0.7500. These currencies are operating under the market pall and will be subject to whim. Headline inflation data may not send immediate and obvious warning signals to markets, but the message will be carried.