The risk-off mood continues in global markets following Friday’s US inflation rise, with stocks and other risky assets continuing to fall as the USD Dollar and yields continue to rise.
- Friday’s US CPI data print saw a surprise rise in annualized inflation to a new 40-year high at 8.6%. This sparked fears of unending inflationary pressure, triggering speculation that the Federal Reserve may make a 0.75% rate hike next Wednesday, sending risk assets sharply lower.
- Stock markets globally are falling heavily, with the S&P 500 trading off-hours close to its 18-month low.
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- The Forex market is in focus as the USD/JPY currency pair powered to a new 24-year high during today’s Asian session. The Japanese Yen is weak as the Bank of Japan has signaled its determination to persist with a unique policy of strong monetary easing as it attempt to drive Japanese inflation up to reach its target of 2%, while almost all other major central banks are tightening monetary policy to combat overly high inflation rates. The USD is stronger on rising yields. These factors are producing a very strong bullish breakout in the USD/JPY currency pair, with the price now having made new highs for 6 consecutive days.
- BTC/USD traded as low as $22k over the weekend after finally seeming to break decisively below its floor around $28k. The price has recovered since then to trade around $25k, but the outlook is bearish. The price could trade as low as $13k soon.
- Other currencies apart from the Yen, notably the Australian and New Zealand Dollars, are also falling against the US Dollar, which remains the strongest major currency. The Turkish Lira continues its decline toward record lows.
- US Treasury Yields are continuing their strong rise, with the 2-year yield reaching a 14-year high at 3.193%.
- Daily new coronavirus cases globally fell again last week, continuing a long-term trend.
- It is estimated that 66.3% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 6.8% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.
- Total confirmed new coronavirus cases worldwide stand at over 540.5 million with an average case fatality rate of 1.17%.
- The rate of new coronavirus infections appears to now be significantly increasing only in Belize, Brazil, Chile, Guatemala, the UAE, and Vanuatu.
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