Oil prices surged above US$106/barrel overnight, following the ‘shuttering’ of the Saudi pipeline, used to circumvent the closure of the Strait of Hormuz. This has come about, due to the military attacks on Yemen and Saudi Arabia from the Houthi’s, as tensions escalate in the Middle East. This has pushed US and European bond yields to record levels, not seen, in nearly 20 years. These are very dangerous times as the energy crisis spirals out of control. This will feed through to inflation and may well tip some dire fiscal circumstances, over the edge. The safety of the US Dollar remains prime, with the EUR trading down to 1.1530, while the GBP surrendered 1.3500.
The surging reserve continues to damage commodity currencies, with the NZD falling to 0.5750, while the AUD slumped to 0.7120. All eyes remain on the Middle East and the Federal Reserve. What can the US do? What can the Fed and US Treasury do?
