Daily Market Commentary 19th October 2023

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US Bond Yields hit 2007 levels, in the 10-year, adding pressure to US Regional Banks and the Federal Reserve. Equity markets have ignored the war in Israel, rising oil prices and inflation, rallying strongly until today. The US share markets shifted lower, but it may only be a correction, although there are a lot of fundamental warning flags. European inflation data was good, with headline inflation falling from 5.2% to 4.3%. This reflects the 2022 numbers falling off the annualised measurement, as monthly CPI data still shows steady and stubborn inflation, remains. The same is true in the UK, although there even the headline inflation rate has not fallen, with UK number still holding 6.7%. The rise in US bond yields supported the US Dollar, with the EUR retreating to 1.0530, while the GBP slipped to 1.2140.

The rising reserve put further downward pressure on the commodity currencies, with the AUD falling to 0.6330, while the NZD dropped to 0.5850. Local markets will be watching the Australian employment numbers, for inflationary pressures, while the RBA releases their annual report. All markets are watching the War in Israel and any possible escalation.

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