US Share markets continued the strong rally, which began in June, this time fuelled by better than expected inflation data. Is this a full fledged rally, or a ‘Bear Market Rally’? The major indices (Dow/Nasdaq/S&P) are all in positive territory since June, but remain in a technical ‘Bear Market’, so time will tell. US CPI and PPI were both flat, which is an improvement on record inflation levels suffered over the previous months. Further deficit/debt spending by the Biden administration and continued ‘Russian sanctions will ensure inflationary pressures remain, while the energy crises could hit top-gear, as the Northern Hemisphere winter fast approaches.
The USD bounced slightly Friday, with the EUR slipping back to 1.0250, while the GBP fell to 1.2130. Inflation and speculation surrounding Central Bank actions will continue to dominate market activity, while a read on US Retail Sales will be a gauge of the health of the consumer. The RBNZ will likely raise rates a further 50 basis points, but this will not likely boost the currency, as inflation rages through the economy.
RBA and FOMC minutes will also be released in the coming week, giving an insight into Central Bank thinking.