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Daily Market Commentary 14th September 2021

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Global equities rebounded to open the new week, after suffering some serious losses, in the previous trading week. The markets are very sensitive to any threats to fiscal and monetary stimulus and the big threat is inflation. European markets were surprised by a decade long high of 3% CPI, in the last week, to which the ECB has decided to curb their pandemic recovery program (PEPP). The Fed will be faced with similar choices, when important inflation data is released tonight. US PPI hit 8.3%, which is a record since the inception of the economic measure, which contradicts the transitory narrative being used by the Fed. The EUR drifted to 1.1800, while the GBP traded 1.3830, awaiting key data releases.

NZ food inflation was lower than expected, while Japanese PPI was flat, a welcome relief. If this continues to ease in the US numbers, then the pressure may be released on global equities and bond yields. The previous number of 5.4% will be the target and any serious additions to this, would put a cat amongst the pigeons. The commodity currencies remained calm ahead of the important inflation number, with the AUD trading around 0.7350, while the NZD looks to hold 0.7100.

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