The best thing you can do when trading the markets is to always embrace change. With the UK facing a rally against its currency and a crash in the gold bond market, this is a big signal ushering in a new era in global markets.
The recipe that worked during the pandemic is a complete failure now that deficits and debt buildup are issues that will no longer be ignored. During the early stages of COVID-19 and lockdowns, governments bailed out economies at a time when central banks promised to keep interest rates low for as long as necessary to revive economic activity. Today, we see just the opposite.Read:Factbox: Looming US rail strike could disrupt commodity markets
Since inflation has become the number one priority for central banks, they are tightening policy in a rather aggressive manner, and that whole illusion has been shattered. easy money in the markets. Gone are the days when governments could cash in to solve the problem without repercussions, and the UK is finding it the hard way. They certainly won’t be the last.
It’s crazy to think that the two-year Treasury yields paid 0.75% at the start of the year. Last week, it was 3.50%. Yesterday, it was 4.75%. This is a massive increase of 400 basis points (!) in just nine months. If someone told you it was at the beginning of the year, it would be hard to understand and yet here we go.
Austerity is starting to return, and as Adam warns, it will be even more painful than before.Read:Countries do not control their own currencies