Global equities continue to rally, on the back of the unprecedented monetary expansionism and earnings. The real problems in global economies, is not being reflected in markets because of the historical liquidity.’ Supply Chain’ issues, and a growing energy crises, are all contributing to the real economic problems globally. Oil prices continue to spike, surging through US$83/barrel, while the US 10 year Bond yield has blown through 1.625%. These major international problems are driving massive inflationary pressures, while growth forecasts are being slashed, hence ‘Stagflation’ is here.
The USD has lost ground, despite the rising bond yields, with the EUR rising to 1.1640. The GBP has pushed all the way back to 1.3800, following the Bank of England Governor announcing action will need to be taken to contain inflation driven by the energy crises. Global Dairy prices managed to book gains and a flagging reserve allowed the currency to rise above 0.7150, while the AUD looks to regain 0.7500.
US Building Permits contracted sharply overnight, falling 7.7%, while Housing Starts shrunk by 1.2%. Equities are not reflective of the parlous state of global economies.