Daily Market Commentary 13th January 2021

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Markets are looking to build on the 2020 economic recovery and the focus is squarely on growth and inflation. US inflation is creeping up towards 3% and the Bond Yields have reflected this, with the 10 Year rates jumping to 1.168%! Rising interest rates is a healthy sign of recovery, especially considering the massive historical amount of monetary stimulus flooding markets, compliments of unprecedented and never seen before monetary policy. Equities were flat and the US Dollar took a breather, with the EUR trading up to 1.2170, while the GBP rebounded to 1.3630.

Commodity currencies also reacted to the softer reserve, with the AUD trading 0.7735, while the NZD is looking to regain 0.7200. There were no major economic releases to direct markets and the virus fears appear to be under control, with many economies under severe lock-down restrictions. Any economic recovery will be reflected in growth, inflation and interest rates, as first quarter data is likely to reflect the severe economic and social restrictions imposed on Western economies.

The US inauguration is on January 20th, so expect political disruption, that could well spread to global markets.

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