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Daily Market Commentary 30th September 2021

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European and US markets stabilised overnight, following a big sell-off in the previous session, triggered by ‘stagflation’ fears.  Flagging global growth and spiking inflation are raising the spectre of the much feared economic malaise of ‘stagflation’. Adding to market pressure is the US Budget crises, combined with the pending debt ceiling battle, adding up to a possible ‘perfect storm’. The US 10 year Bond Yields are spiking and reminding Central Banks that interest rates will move in markets, despite unprecedented and historical suppression. Central Bankers meet in Europe to wax lyrical about supply chain issues and the deflect from the real problem, inflation. Bond Yield rises are driving a resurgent US Dollar, with the EUR now testing 1.1600, while the GBP crashed to 1.3400.

Commodity currencies are not faring much better, in the face of a soaring reserve, with the AUD crashing to 0.7170, while the NZD has collapsed to trade just above 0.6850. Central Bankers are intent on holding the narrative of temporary and transitory inflation, blaming supply chain issues, but the reality is something completely different. Currencies are being completely destabilised by Central Bank monetary policy across the world, undermining buying power and creating massive asset bubbles. Enormous budget deficits, funded by debt, remind us all of the extremely parlous economic apocalypse possibly awaiting around the corner?

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