Daily Market Commentary 28th April 2024

Markets closed out a week of recovery on equities, although bond yields spiked higher, reflecting inflation is on the rise again and Central Bank interest rate cuts may be further away than anticipated. US GDP was drastically lower than previous measures, coming in at 1.6%, as the massive fiscal stimulus wears thin. US inflation appears to be on the rise again, with the important PCE indicator, pushing higher once again. The US economy is showing signs of economic malaise, with both growth and inflation heading in the wrong directions, while deficits and debt are spiralling out of control. The US Dollar continues to encourage support, by attractively high bond yields, until one day when it simply does not. Even high interest rates will fail to attract buyers, when the currency, is no longer the sole world reserve. The EUR slipped back below 1.0700, while the GBP fell back below 1.2500, following hawkish commentary from the Bank of England.

Commodity currencies have stabilised, with the AUD consolidating above 0.6500, while the NZD trades just below 0.5950. The Bank of Japan left rates unchanged, as expected, but the market reaction was to further trash the Yen. The Yen has collapsed, heading to historical lows, charging towards 160.00. Markets had been anticipating some sort of intervention from the Bank of Japan, to stabilise the spiralling currency, but nothing to date. Expect some real action, in the coming week, as Japan approaches not just a currency crisis.