Bond yields across Europe and the US continued to rise, reversing 2023’s sharps falls, following steep declines in inflation. This year has so far seen a reversal in inflationary pressures, which have risen across the US and Europe. UK inflation jumped back to 4%, putting the dampeners on any looming rate cuts planned from the Bank of England. This has been the trend across Europe, threatening promised and planned rate cuts, with at least deferral. Prices in energy and traded goods are under pressure, due to the Middle Eastern and Ukraine wars, sanctions and supply constraints. The causes of extreme inflation have not gone away. US Retail Sales jumped to 5.4% p.a., which reflects the resilience of the consumer, but is also a product of extended debt funded, fiscal largesse. The rise in UK inflation allowed the falling GBP to stabilise above 1.2650, while the Yen continues to freefall, heading back towards 150.00.
Commodity currencies remain under pressure and did not react well to weaker than expected Chinese GDP data, with the AUD tumbling to 0.6530, while the NZD crashed below 0.6100. Chinese GDP remained strong, 5.2%, but missed expectations, adding downward pressure to oil and other commodity prices.
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