US Markets were closed for Thanksgiving, while limited trade is expected for ‘Black Friday’. The big news out of the USA was the Fed Minutes. The Fed has been put under immense pressure, due to surging inflation, which they have labelled ‘transitory’ all year. They have been deliberately misleading, as inflation has been building all year, due to the Biden regime’s inflationary fiscal policies and the Fed’s ultra-accommodative monetary policy. The Fed minutes shows members recognise the extent of the problem and need to act. They are considering moving tapering of QE forward, and also rate rises, with their own preferred PCE measure of inflation surging to unprecedented levels. The problem with these solutions, is that QE is being used to fund the Government issued treasuries and markets are dependent on historically and artificially low interest rates?
The rise in US Bond Yields continues, as does the surging US Dollar, which is ripping through the currency markets. The EUR hit a 12 month low, crashing below 1.1200, while the GBP followed back to 1.3320. South Korean Central Bank followed the RBNZ and raised rates 0.25%, to 1%. The inevitable rate rises across the globe, have been forced by surging inflation and will have severe consequences on asset bubbles across the classes.
The NZD continued the crunch, collapsing to 0.6940, following the ‘dovish’ commentary from the RBNZ. The Australian Dollar performed better, but still could not resist the resurgent reserve, falling back to 0.7180. Expect quiet trading to close out the week due to US holidays.