Daily Market Commentary 24th February 2022

Global markets are still nervous trading around the developing Ukrainian crises. Putin has recognised the two break-away republics and sent in ‘peace-keeping’ troops to protect the population from Ukrainian forces. The Ukrainians have declared a State of Emergency and moved to mobilise further, but there has been a reduction in their shelling of the Donbass. The irony of the Ukrainians declaring a State of Emergency, during a real crises, while Canada’s Trudeau declared a State of Emergency over a protest and mobilised against his own people? Markets remained relatively calm with Western nations following the UK and the US with sanctions on the Russians and the breakaway Republics.

US Bond Yields inched higher and the US Dollar was slightly firmer, ahead of key inflationary data. The PCE number, which the Fed gauges inflation upon, is due for release tonight. The Fed will almost certainly raise rates in the upcoming March meeting and probably signal an end to QE. The EUR fell back to 1.1300, while the GBP slipped back to 1.3540, following commentary by the Bank of England Governor. Governor Baily was quick to recognise inflationary pressures and keen to label a big part of it energy prices, due in large part to the Ukrainian crises. The energy crises was devastating and consuming the UK and Europe, long before the Ukraine situation blew up and comes from insane green energy Government policy and is predominantly a self inflicted crises. It is an excuse to calm the growing domestic resistance to spiralling energy prices.

The RBNZ raised rates, as expected, but was more hawkish in their narrative. This unsettled markets and allowed the NZD to push all the way back to 0.6800, before settling back this morning to trade just above 0.6750. The RBNZ was refreshingly open and transparent in its monetary policy moves. They recognised the serious economic threat of spiralling inflation and hinted at continued rises, up to 3.35%, perhaps in blocks of 50 basis points. They also hinted that QE would be reduced, which could seriously impact the Governments massive debt monitisation program and curb their profligacy? The AUD consolidated above 0.7200, and appears to be supported by the surging commodity prices.

Attention remains on the Ukraine and the US inflation measure, PCE.