Daily Market Commentary 27th April 2021

Markets opened the week flat, with the focus for the week being growth and inflation, as the Fed meets Tuesday and Wednesday. The Fed is likely to assure markets of continued QE and that inflationary pressures are temporary, allowing them to keep interest rates at historical lows and ignore the over heating economy. Commodity prices are reaching record highs, as natural function of monetary policy, which creates massive asset bubbles across the classes. This boosted the commodity associated currencies, with the AUD reaching 0.7800, while the NZD shot to 0.7240.

The week will focus on the FOMC meeting and input price pressures. The massive rise in input costs will directly translate into retail prices and drive inflation. The freight train is coming. The German IFO Business Climate report was flat, while the Dallas Fed Manufacturing Index was running hot, contrasting the EU economy (caught in various states lock-downs) and the US economy re-opening.