Markets were mixed overnight, with equity gains on European Bourses, while US markets celebrated MLK Day. Many of the Bank stocks have come off recent highs following profit disclosures. The revenue numbers are beating expectations, but questions remain over profitability and bottom line. Rising interest rates usually provide a fertile environment to banks, but this time around there are questions over the unlimited liquidity banks have had the benefit of? The US looks to regain momentum and Bond Yields remain bid, with the 10 Year approaching 1.8% and the trend is upwards. The US Dollar is stable, with the EUR above 1.1400, while the GBP trades around 1.3650.
Commodities remain reasonably well bid and the associated currencies hold ground. The NZD looks to regain 0.6800, while the AUD holds above 0.7200, following a stronger than expected Building Permits number. Chinese GDP growth was lower, but better than expected, while Retail Sales took a hit. There are many lock-downs occurring in China at the moment, due to new strains of virus, which will impact the Chinese economic performance and could hit already strained supply chains.
Markets will look to the Bank of Japan monetary policy, in domestic trade, although not much is expected. The Japanese economy has had very little growth or inflation, as has been the case for many years. European inflation data will be closely monitored, as record highs fast approach, accompanied by flagging growth. Stagflation.