Daily Market Commentary 9th February 2022

US markets keenly await the latest inflation numbers, with the CPI expected to break yet another 40 year record, rising to 7.2%. There has been a softening in preliminary inflation numbers, so perhaps market expectations are a bit higher, than the pundits are banking on? Global equities have resumed the bull markets, although they remain in correction territory, but recovering from the danger of a technical bear market. US 10 Year Bond Yields keep rising, pushing up to 1.96%, which may provide a psychological jolt, when the Big number changes to ‘2’?

The Fed will raise rates but the test will be how aggressively and by how much? QE will be shut down and the question is now, what is the plan to actually shrink the vastly bloated Balance Sheet? The US trade deficit is headed for an annualised US$1 Trillion, an astounding further record, amongst other records you do not want to be breaking. Trade deficits, as with fiscal deficits must be funded. The EUR was steady, trading 1.1420, while the GBP inched up to 1.3540.

Rising iron ore prices supported the stronger AUD, which pushed up to 0.7130, while the NZD bounced strongly off 0.6600. The latest iteration of the virus is blowing through Australia and the economy is re-opening, although the hermit State New Zealand, remains under draconian laws and Canadian style protests are growing.