Bond markets moved into dangerous territory, with European bond yields reaching 2008, GFC highs. US bond yields also spiked to multi-year highs, warning bells ringing louder every single day. Equity markets are listening, adding further losses to those being suffered, all week. The Middle East crisis must be resolved, to reverse the inevitable disaster unfolding in market, across the world. US PPI came in much hotter than expected, leading into tonight’s important CPI number release, which will probably heat up. The US Treasury ‘bond buy-back’ scheme, failed to impress markets, so a more radical strategy is needed. The ECB raised rates overnight, by a further 25 basis points, attempting to combat rising inflation. The US regained strength, with the EUR slipping back towards 1.1600, while the GBP fell back to 1.3515.Commodity currencies were also buffeted by the resurgent reserve, with the NZD dropping below .5800, while the AUD fell to .7160. Fear is building markets and this is being reflected in the numbers. The energy crisis is behind this and the impact it will have on inflation and trade balances.
