GBP/AUD at Historical Res. |07:23:58 (UTC) Fri Jan 28, 2022
The pound sank again today as the US dollar climbed following the Federal Open Market Committee (FOMC) meeting. The uncertainty surrounding Prime Minister Boris Johnson's future has devalued Sterling. A report on Johnson's actions under the COVID-19 limitations will be made public soon. Perhaps a leadership change is required. Today's markets are raging in red as stocks and bonds collide. The Fed surprised the markets by becoming more hawkish than expected. The announcement provided the expected facts, but the subsequent news conference set off the pyrotechnics.
In response to a question, Fed Chair Jerome Powell declared that the Fed would increase rates at every meeting this year if conditions warranted it. Markets now anticipate five rate increases in 2022. In March, the Fed is expected to stop buying assets and boost interest rates. The rate of tightening and the timing of balance-sheet reductions are both uncertain. The Nikkei and Kospi indexes also plummeted more than 3%, as did other APAC markets. In reaction to the market turbulence, volatility increased, with the VIX index maintaining a reading above 30. Crude oil peaked in North America at a 6.5-year high before dipping in Asia. Brent futures reached $90 per barrel, while WTI reached $87.95 per barrel. Meanwhile, despite the Fed's announcement, industrial metals have held up nicely. The 2-year Treasury note yield has risen 13 basis points to around 1.17 percent.Real rates increased by 10 basis points throughout the yield curve, with the 10-year rate rising the most. The 10-year Treasury note yield has reached 1.88 percent.The yields on G-10 government bonds are all higher. The CPI in New Zealand was higher than projected, at 1.4 percent quarterly and 5.9 percent annually. The RBNZ has already begun to raise interest rates. Their next meeting is scheduled for February 23rd. New Zealand's 10-year government bond gained 2.7 percent, the most since November 2018. The U.K./German Trade Relationship: KeyEventRisk for Recent Print's
German import prices unexpectedly slowed at the end of last year, but the pace of increase remained strong, preliminary data from the statistical office showed Friday. The import price index rose 24.0 percent year-on-year following a 24.7 percent increase in November. Economists had expected 26.4 percent inflation. In October, import prices increased 21.7 percent annually. Compared to the previous month, import prices edged up 0.1 percent, which was much slower than the 2.0 percent increase economists had expected. The annual average import price inflation was 13.5 percent in 2021, which was the highest since 1981 when it was 13.7 percent. In 2020, import prices decreased 4.3 percent. Prices of energy import surged 135.0 percent annually, driven by a 267.5 percent jump in natural gas import prices and a 65.3 percent increase in crude oil import prices. Excluding crude oil and mineral oil products, import prices climbed 21.4 percent year-on-year and 0.6 percent from the previous month. In annual average, the increase was 10.9 percent in 2021. The export price index rose 10.9 percent year-on-year in December, marking the biggest increase since the same month in 1974, when prices climbed 15.2 percent. In November, export prices rose 9.9 percent annually. In 2021, the annual average increase in export prices was 5.6 percent, which was the highest since 1981 when it was 5.8 percent.
In response to a question, Fed Chair Jerome Powell declared that the Fed would increase rates at every meeting this year if conditions warranted it. Markets now anticipate five rate increases in 2022. In March, the Fed is expected to stop buying assets and boost interest rates. The rate of tightening and the timing of balance-sheet reductions are both uncertain. The Nikkei and Kospi indexes also plummeted more than 3%, as did other APAC markets. In reaction to the market turbulence, volatility increased, with the VIX index maintaining a reading above 30. Crude oil peaked in North America at a 6.5-year high before dipping in Asia. Brent futures reached $90 per barrel, while WTI reached $87.95 per barrel. Meanwhile, despite the Fed's announcement, industrial metals have held up nicely. The 2-year Treasury note yield has risen 13 basis points to around 1.17 percent.Real rates increased by 10 basis points throughout the yield curve, with the 10-year rate rising the most. The 10-year Treasury note yield has reached 1.88 percent.The yields on G-10 government bonds are all higher. The CPI in New Zealand was higher than projected, at 1.4 percent quarterly and 5.9 percent annually. The RBNZ has already begun to raise interest rates. Their next meeting is scheduled for February 23rd. New Zealand's 10-year government bond gained 2.7 percent, the most since November 2018. The U.K./German Trade Relationship: KeyEventRisk for Recent Print's
German import prices unexpectedly slowed at the end of last year, but the pace of increase remained strong, preliminary data from the statistical office showed Friday. The import price index rose 24.0 percent year-on-year following a 24.7 percent increase in November. Economists had expected 26.4 percent inflation. In October, import prices increased 21.7 percent annually. Compared to the previous month, import prices edged up 0.1 percent, which was much slower than the 2.0 percent increase economists had expected. The annual average import price inflation was 13.5 percent in 2021, which was the highest since 1981 when it was 13.7 percent. In 2020, import prices decreased 4.3 percent. Prices of energy import surged 135.0 percent annually, driven by a 267.5 percent jump in natural gas import prices and a 65.3 percent increase in crude oil import prices. Excluding crude oil and mineral oil products, import prices climbed 21.4 percent year-on-year and 0.6 percent from the previous month. In annual average, the increase was 10.9 percent in 2021. The export price index rose 10.9 percent year-on-year in December, marking the biggest increase since the same month in 1974, when prices climbed 15.2 percent. In November, export prices rose 9.9 percent annually. In 2021, the annual average increase in export prices was 5.6 percent, which was the highest since 1981 when it was 5.8 percent.
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