Daily Market Commentary 20th September 2022

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Global equities stabilised to open the new week, ahead of the all important FOMC meeting, opening tomorrow. The Fed are expected to raise rates by a further 75 basis points, in an effort to battle runaway inflation, which was reinforced with the latest inflation number. Markets had been expecting a softening of inflation, having reached ‘peak inflation’, allowing the Fed to soften their aggressive war on rising prices. The 8.3% reading and the core-inflation spike to 6.3%, should be enough to convince the Fed that the war is far from over. US 10 year Bond Yields hit 10 year highs, trading above 3.5%, dispelling hopes and confirming widespread inflationary pressures.

Rising interest rates and safety flows have supported the US Dollar, with the EUR falling below the important psychological parity, while the GBP has touched the 1985 low of 1. 1350. The Housing Sector remains a leading indicator and the NAHB House Market Index confirmed deeper problems, sliding deeper into negative territory. Commodity currencies have suffered the rising reserve, with the AUD falling below 0.6700, while the NZD has crashed under 0.5950.

All await the FOMC meeting kicking off tonight, culminating tomorrow. The RBA minutes will attract some attention in today’s local trade, while the ECB also meets tomorrow, in a non-monetary policy event.

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