The pressure on US and European bonds increased to dangerous levels, once again, threatened by the deepening energy crisis and the resultant inflationary pressures. Bond yields across Europe and the US spiked to perilous levels, sending warning signals to markets, which equity markets received loud and clear. Equity markets tumbled and the US Dollar gathered momentum. The EUR traded around 1.1375, while the GBP hit 1.3250. These are dangerous times and a full-blown bond crisis could well topple markets.
The rising reserve added pressure to commodity currencies, with the AUD falling back towards 0.7000, while the NZD pushed off 0.5650. The energy crisis is becoming more and more pressing, with global diesel shortages now causing flow-on damage, to major industrialised economies. The RBA are set to make their latest interest rate decision today and they will more than likely recognise the dire situation, raising rates a further 25 basis points.
