Daily Market Commentary 15th November 2021

US equity markets experienced a relief rally, after being severely shaken by the dramatic and destructive US inflation number (6.2%pa) released during the week. The runaway inflation will only be aggravated by massive increases in fiscal spending, further supply chain disruptions and the burgeoning energy crises. Inflation can be looked upon as a sobering saviour of the monetary system. Central Banks have been reckless and negligent in the adoption of ‘modern monetary theory’ and inflation is a rude awakening for them, which will require a ‘Paul Volcker’ like renaissance. QE must not only be halted, but QT must be employed, while interest rates must rise sharply.

The University of Michigan Economic Sentiment report was at a 10 year low, reflecting the dire straights the US economy is in and in the coming week, further analysis of inflationary impacts will be considered. The US Dollar settled, closing out a strong week of rallies. The EUR traded 1.1440, while the GBP rebounded, to trade back above 1.3400.

Commodity currencies have been severely battered by the surging reserve currency, but the relief rally stabilised their inclement descent. The AUD recovered to trade back above 0.7300, while the NZD rebounded strongly off the lows of 0.7000. The coming week will focus on growth and trade with various global CPI/PPI data releases.