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Daily Market Commentary 9th July 2021

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The ECB decided to clarify their inflation target, from below 2%p.a., to some where above 2%p.a., when necessary. So I hope that is clear to everyone? The signal it sends to markets is inflation is coming and there is not much we can do about it. This, combined with the most courageous and questionable growth forecasts from the EC (considering the  delta virus and political bed-wetters response),sounded market warning bells. Equity markets crashed and bond yields followed. US 10 Year bond yields fell to 1.25%, with flight-to-safety cited as the cause, but there is no demand for the endless mountain of treasury debt. This is now a function of Central Bank purchasing action.

US Weekly Jobless Claims rose to higher than expected levels and the previous weeks claims were revised upwards. You cannot put lipstick on a pig and the global economy is being destroyed by lockdowns, fiscal and monetary recklessness and debt. Asset bubbles across many classes will burst and pandemonium will ensue. The EUR managed to bounce to 1.1830 , amongst the carnage, while the GBP crashed to 1.3760.

Commodity currencies gave up resistance, with the AUD plummeting to 0.7420, while the NZD spiralled down to 0.6940. Growth and inflation remain the key factors driving markets, while Bond Yields reveal dark and cryptic questions.

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