Daily Market Commentary 18th October 2022

US Equity markets rallied strongly once again, eliminating last weeks losses, in further extremely volatile trading. US 10 Year bonds trade around 4%, near recent highs, while UK 10 Year Gilts plunged below 4%. The new British Chancellor, Jeremy Hunt, reversed all of the enormously destructive previous mini-budget and the markets reacted positively. This is all window dressing, as the most incompetent PM Truss, awaits her turn to face the music. The country remains in crises and all due to terrible political leadership, which will only continue as ‘the deck chairs are rearranged on the Titanic’, once again. The rally in Bond Yields was reflected in the GBP, which recovered to trade 1.1370, but expect further extreme fluctuations.

Japanese Industrial Production jumped 5.8%, but remains under serious pressure, as outlined in last weeks Tankan report and the Yen remains a threat. The Bank of Japan may be forced to intervene in the currency markets, as the Yen once again spirals lower, fast approaching 149.00. Commodity currencies regained some ground, as the reserve drifts lower, with the AUD looking to regain 0.6300, while the NZD bouncing towards 0.5650. Local markets will be keenly analysing the RBA minutes, while NZ inflation will be the focus. Inflation is expected to ease, due to lower oil prices, but this respite may be short-lived?