Daily Market Commentary 17th November 2022

UK inflation blew through expectations, hitting a 41 year high, soaring to 11.1% p.a.! Market expectations were for new record highs, as inflation runs rampant through the UK economy, but this latest number confirms analysts worst fears. Markets did not panic, as the latest rendition of a Tory Government, is set to release a new Fiscal Plan tonight. Chancellor Hunt is under extreme pressure to address the crises and is expected to make spending cuts and raise taxes. Europe is in a similar crises, with Italian inflation hitting 11.8%, all suffering the energy crises and the fallout from inflation and rising rates. This is far from over, as is the war in the Ukraine, with Winter fast approaching and energy prices set to surge again. The EUR was supported by hawkish language coming from the ECB, trading 1.1380, while the GBP traded 1.1890.

US Markets continue to speculate that inflation has peaked and the Fed will Pause/Pivot, but the Fed’s San Francisco member, Daly, assured markets interest rates will rise further. US Bond Yields continue to fall, while US Retail Sales were steady, although major Retailers such as Target are warning of a massive slump as demand collapses. The easing in demand has not been good for commodities and the associated currencies, with the AUD falling to 0.6730, while the NZD crashed back towards 0.6100.

Local markets await Australian Unemployment data, which is expected to rise, while NZ PPI will gauge local inflationary pressures. Japan has experienced some bleak economic news of late, so the latest trade data (set to be released today), may reinforce the bleaker economic narrative?