2022-09-27 07:55:00


The markets think that central banks must choose between recession and inflation. This is a logical fallacy. Their  mandate is not to design bloated leveraged growth; rather, it is the price stability.

Simply put, Recessions are not caused by central banks raising interest rates - but by  years of excessive debt, malinvestment, and reckless risk-taking.GBP turmoil is nothing but arising out of  balooning twin deficits - arithmetical expression of unbridled  leverages -exacerbated by public debt.

Markets appear to be pausing for breath after  sterling led turmoil.Volatility remains high as liquidity is likely scarce for now.
USD dips to remain shallow; Fed doubles down on hawkish policy.Fed speakers reinforced uptrend in  yields. Durable  goods & Cons confidence today.

Positive trending setup - 115.34 May 2002 high next long term resistance.113.37 upper 21 day Bolli a good indicator of a short term overbought market.( these Friday`s 113.01 close and Monday`s 114.58 high initial support, resistance

UK gilts led EZ yields to multi year highs, as winter looms.New right wing Italian govt -an issue. Lagarde says ECB won`t use its latest emergency scheme to buy  bonds of countries that make "policy errors.Recessionary German Ifo data, much weaker Belgian business confidence & widening BTP-Bund yields spreads.

USD/CNY firm at 7.1614 vs close 7.1354;
PBOC fix at 7.0722 in between wide range of forecasts.Still shows significant amount of countercyclical damping

GBP/USD in febrile mood as BoE reaction  awaited. Markets look forward to hearing Pill today (CEPR Barclays Monetary Policy forum).Close above  NY 1.0934 high would be positive signal.GBP/USD resistance is now seen at 1.1000 and 1.1200 -61.8% Fibo of Sept 1.1738-1.0327 plunge -parity primary downside target.

BoJ carried out unscheduled JGB buying operation -thus cutting legs out from under the yen.Juicy yield spreads outweighing intervention worries.Psychological 145.00 first resistance, then pre intervention 145.90 high

As expected 81.65 hit. Pause and shallow pull back to be seen . Begins to learn to live in this new home .Thankfully , the pace of intervention slows down. Rising dollar debt-servicing costs - adding substantial number to invisible payments under CAD - has the market factored that ? Unlikely .
Refinancing  short term FC debt is evolving into an issue & hence  rupee credit growth ?