Daily Market Commentary 7th December 2021

The market volatility continued into the new week, with US stocks roaring back, as fears over the latest virus mutation subsided. US equities rallied strongly and US Bond Yields bounced off lows, while Oil prices regained some lost ground. German Factory Orders contracted 6.9%, while the terrible Non Farm Payroll number from Friday, was forgotten. Markets are expecting the Fed to accelerate the tapering of QE and soon begin to raise interest rates in an attempt to combat surging inflation rates. The embarrassment of the Federal Reserve continuing to label the runaway inflation as ‘transitory’ has been exposed. Inflation numbers will be released later in the week and they may be close to 7%? The USD regained some ground, with the EUR slipping to 1.1270, while the Yen fell back to 113.40.

Commodity prices regained some ground, with market sentiment and this stabilised the collapse in the associated currencies. The NZD settled around 0.6750, while the AUD bounced back off 0.7000, ahead of the RBA meeting today. The RBA is expected to leave rates and monetary policy unchanged, as the extended and destructive lockdowns this year, were a hammer to any growth and inflation worries. Massive volatility over the last week or so is continuing, arising from the virus and Fed intended actions. The volatility extended to cryptocurrencies with Bitcoin losing a third of its value over the weekend, only to stage a recovery, when market sentiment improved in the new trading week.