Daily Market Commentary 22nd March 2023

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Global equity markets continued to rebound, following further assurances from US Treasury Secretary Yellen, that the Government stood ready to support bank depositors, as was needed. This was enough to reassure market bonds and currencies settles down, although the US yield curves sharp inversion, points to a looming recession. The important German and EU ZEW Economic Sentiment report fell sharply, reflecting the fears still out in the markets, as this banking crises is far from over. US Existing Home sales jumped 14.5%, which is good news for the housing sector, which has been completely hammered for an extended period. Attention will now focus on the Federal Reserve, which will announce their latest rate decision, along with the Bank of England. They will probably not hesitate to raise rates, once again, to fight the elevated inflation. The Fed has a problem though, as all of the balance sheet reduction (over the last year), in the form of QT, will be completely undone and reversed by money printing to bail-out banks. This will have a super-inflationary impact on the monetary system. The EUR held above the 1.0700, while the GBP slipped back to trade 1.2200.

The RBA minutes were released and they showed dovish sentiment, hinting that the RBA is ready to pause future interest rate hikes. The pressure is immense, on the Central Bank, to hold mortgage rates and ease suffering, in terms of disposable income and the consumer. This did not aid the AUD, which has fallen back to 0.6650, while the NZD tumbled back towards 0.6150. The banking crises is far from over and any possible fix, will result in massively increased global money supply, which will extend and expand the current inflation crises. All eyes are on the Fed and the BoE.

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