Daily Market Commentary 28th October 2021

US Equity markets continued to trade around record historical highs, although the upward momentum, driven by earnings seems to have stalled. The Bank of Canada recognised the dangerous spike in inflation and has cut the QE program, indicating it will move into a ‘rising interest rate environment’ in the new year. The UK Budget was upbeat in the economic forecasts, which will only reinforce the Bank of England’s intentions to raise interest rates, at their upcoming meeting. US Durable Goods Orders went negative overnight and the US bonds yields stalled, pushing the US Dollar lower. This allowed the EUR to regain 1.1600, while the Yen rallied to 113.70.

The Australian CPI came in at an annualised 3%, well above the RBA’s target range, but they will be in no hurry to raise rates, quite yet. The Australian inflation rate is embellished by the destructive lockdowns, destroying economic activity and the measure itself. The Australian economy is supported by massive commodity exports and high prices. NZ Business Confidence crashed further yesterday, according to the data, slumping to a negative 13.2% and the trade deficit continues to build momentum, despite strong export volumes and prices.

Attention will turn to the Bank of Japan and the ECB, with no interest rate changes expected, so the narrative will drive sentiment. Inflation and growth remain the central economic narrative.