Markets are very mixed presently with stocks struggling to make gains even with the FED et al being in expansionary mode whereas commodities are recovering with some vigour.

Perhaps what the markets are telling us is the latest rise in US PPI is a concern. The taps could get turned off sooner, but commodity pricing is not only a result of supply restriction but also an inflation hedge. Thursday’s decision by the ECB to slow its bond purchases came as a market surprise but given the inflation numbers at 10 year highs perhaps it’s not that surprising.

We will have further guidance in this week’s CPI numbers from USA, UK and EU with all but the UK version looking to be at present levels thereby providing a chance for market volatility should that not be the case.

COVID levels remain a concern most particularly in the States and is providing a drag on those parts of the economy that struggled first (and second) time around ie the airlines and hospitality but overall is a worry for the recovery. This weeks Michigan consumer sentiment and retail sales will show how consumers are reacting to the resurgence and their level of confidence, or otherwise in the near future. It also is pushing back the “back to office” timings for large companies in the USA.

The markets did take some succour from the phone call between Biden and Xi which was taken to show that there is at least some dialogue between the superpowers; an improvement on recent years.

Commodities have seen a continuation of their recovery for example, Aluminium is now up some 48% on the year in a perfect storm of high demand, production bottlenecks and shipping issues.

Oil struggled as Hurricane Ida hit and China decided to release some of its strategic reserve but has subsequently recovered as investors stepped in.