Markets closed out a very volatile week on a positive note, with bond yields easing and equities back on the rise. Oil prices stabilised, at elevated levels, as did US and European bond yields. The fears over the energy and inflation crisis are real and pressing, but markets are building this in. EU inflation surged, from 3.2% to 3.8%, higher than markets had expected and to threatening levels. The ECB will be under huge pressure, to raise rates and thus entering another circular, fiscal crisis. European bonds are at dangerous levels and servicing the debt consumes more and more of national budgets. The energy and inflation crisis will lead to a fiscal crisis. The US Dollar eased into the close of the week, with the EUR popping back to 1.1275, while the GBP reclaimed 1.3200.The softer reserve allowed commodity currencies to settle, with the AUD regaining 0.6950, while the NZD stubbornly held onto 0.5600. This coming week will begin slowly, with National holidays in both China and Australia. Attention will remain on the energy markets, inflation and bonds.
