Pound slides after CPI report The British pound has taken a tumble after April CPI jumped to 9.0% YoY, up sharply from 7.0% in March. GBP/USD has fallen 100 points today and is trading at 1.2390 in North American trade. UK inflation continues to run at a 40- year high, and the cost of living crisis is undoubtedly keeping Finance Minister Sunak and BoE Governor Bailey awake at night. Core CPI didn’t provide any relief, as it rose to 6.2%, up from 5.7% prior. This indicates that inflationary pressures are broad-based and aren’t about to ease anytime soon. The only positive in the CPI release was that it was a bit lower than the forecast of 9.1%, but I’m sure few in the City of … [Read More...]

The British pound is trading quietly on Monday, as the currency markets have started the week with a whimper. BoE’s Bailey says dark times ahead BoE Governor Bailey testified before lawmakers earlier today, and his message was a grim one. The BoE has predicted that soaring inflation could top 10%, and Bailey today admitted that “this is a bad situation to be in”.  Bailey said that the Ukraine war could cause a further energy shock and that his concern about the surge in food prices was “apocalyptic”. Bailey gets full credit for not sugar-coating what is a difficult economic situation, but his candidness will not help support the struggling pound, which hasn’t posted a winning week since mid-April. I appreciate Bailey’… [Read More...]

Today is one of those days you should not log in to your retirement accounts. ? US stocks are facing relentless selling pressure as investors slash earnings outlook given unclear outlooks for economic growth and the US consumer. Today’s PPI report did little to change the outlook with inflation, which suggests pricing pressures remain uncomfortably high. ? Apple shares fell into bear market territory on worries that future earnings growth will remain in jeopardy given inflationary pressures are not decelerating sharply. If you plan on taking advantage of some of these discounts, be warned that we haven’t seen capitulation just yet. ? Some traders on Wall Street believe that a stock market bottom is nearing, but confidence in that call is not really high. Persistent inflation, uncertainty … [Read More...]

New York had another tumultuous session overnight, dominated by noise from the crypto sector where (un)stable coins continued to suffer from untethering. Either the crypto noise was pushing equities down, or vice versa, I know not. Regardless, the intraday sell-offs reversed, and a semblance of calm descended on Wall Street into the close. For that we can probably thank Jerome Powell, who stuck to the 0.50% rate hike script overnight, temporarily dispelling 0.75% nerves. Currency markets, by contrast, continue to reflect risk concerns around the world. The US dollar pummelled Asian currencies yesterday, although USD/JPY bucked that trend by plunging 250 points to 127.50 at one stage, before finishing 1.25% lower at 128.30. Warnings from Toyota of massive material cost increases, as well as the noise elsewhere in … [Read More...]