Inflation
The current tug-of-war dynamic neatly summarised in a single Friday Tweet.
The most recent data releases are producing some remarkably high inflation numbers.
Today, New Zealand recorded 7.3 per cent inflation for Q2, for example, which was the highest print in the 32 years since 1990.
But looking further forward inflation expectations appear to remain well anchored.
Indeed, long-term inflation expectations are now on their way back down.
This from the US:
Economists are expecting some punchy inflation figures for Australia for Q2 when the June quarter figures are released in 9 days time, mirroring the recently high headline inflation figures for New Zealand, the UK, and the US, for example.
Westpac expects to see core inflation of 1.4 per cent again for Australia in the June quarter, matching the rise in the March quarter, and taking the annual pace up to 4.8 per cent year-on-year.
But while further interest rate hikes this year are a certainty, benchmark bond yields have dropped by around 60 basis points from their highs.
Hopefully by 1 February Aussie households and consumers should have more confidence that interest rates aren't going to keep rising on them.
A timely boost for sagging stock markets here too, you'd think.
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Fuel prices...on the way down!
Source: CommSec
