European and US equity markets rebounded, after heavy losses suffered earlier in the week. The Fed Minutes calmed market uncertainties, revealing a commitment to combatting runaway inflation, considering a further 50-75 basis point rise at the July meeting. This allowed some calm to be restored and enunciated a willingness to suffer a recession. The US Bond Yield curve continues to slip into an inverted curve, flashing red lights, confirming the recession. The Atlantic Fed forecasts have also confirmed a contraction of more than 2% in Q2, following the 1.6% contraction in Q1. The recession is here, the question now is just, ‘how deep and how far’?
US ISM Manufacturing and non-Manufacturing numbers were positive, but the PMI Services and Composite were flat. The ECB inaction is seeing a melt-down in the single currency, hitting a new 20 year low. The EUR fell to 1.0160, while the GBP collapsed to 1.1880, as the British PM walks the political plank. Commodity currencies have suffered a rising reserve and softer commodity prices, due to the weaker demand from recession. The AUD plunged to 0.6750, while the NZD crashed to 0.6130, both under severe pressure.
Markets watch inflationary and growth data, as the focus turns to labour and Fridays Non Farm Payroll release.