The UK inflation number blew away some more records, coming in at 9.1%, topping estimates. The UK is in complete turmoil at present, amidst an energy and food crises, that has sparked a political crises that will claim the PM’s job soon enough. The National Rail-Strike has reminded British Citizens of what the 1970’s was like and the prospects are not good. This could get a lot worse before it gets better. The EU is in the same boat, but unlike the Bank of England, the ECB has failed to act. European and Asian markets were in decline, due to the recession fears, while US markets turned positive, on risk sentiment. The EUR regained 1.0570, while the GBP struggled to 1.2260, as pressure mounts on the Bank of England.
Recession fears have hit commodity demand and prices were softer, allowing the AUD to slip below 0.6900, while the NZD fell back to 0.6250. Canadian inflation spiked too, jumping from 6.8% to 7.7%, despite a recent hike of 50 basis points from the Bank of Canada. Central Banks need to get real and stop with the ‘heroic assumptions’ regarding rampant inflation. Inflation is not peaking and is certainly not transitory. Recessions are deeply unpopular and modern monetary theory has prevented them for many years, but reality is a ‘B*tch’.