US and European markets continued to haemorrhage, to close out a tumultuous week. The Federal Reserve raised interest rates by 50 basis points, with the promise of more to come, but the denial of an even larger rate rise was enough to spark a rally in US Share Markets. The reality of the situation, with rampant inflation, and the lack of attention to monetary liquidity, was enough to kick off a major collapse in equities for the remainder of the week. US Bond Yields shot up, but the lack of attention to QE, will ensure fuel continues to pour onto spiralling inflation.
Western sanctions on Russia have backfired on Europe, only aggravating the energy crises driving Europe into a recession. The Federal Reserve and Bank of England have addressed interest rates, but ignored monetary stimulus, while the EU has not even addressed interest rates causing their own inflation crises. The EU is heading down a dark road of a potential deep recession, driven by the energy crises, inflation and their own sanctions. The EUR has fallen below 1.0500, while the GBP has crashed to 1.2330, despite rising interest rates from the Bank of England.
Rising commodity prices have failed to address the surging reserve, with the AUD plunging to 0.7050, while the NZD crashed below 0.6400.The coming week will be dominated by inflation and rising bond yields, culminating in the University of Michigan Economic Sentiment report, to close out the week. Will the collapse in equities and the rise in interest rates continue? Will Central Banks address monetary liquidity and contract their collective balance sheets, to become serious about the fight against inflation?