Inflation burp
Columnist and professional investor Conor Sen threw up a handful of screencaps from the Bloomberg Terminal to illustrate what he imaginatively describes as an "inflation burp", which is now passing.
It's not a bad analogy, and may in some respects reflect some of the brief inflation spikes seen after wars and pandemics of decades past.
I've uploaded too many unattributed Bloomberg screenshots already over the past month, but in summary, from the latest US data:
-supply chain pressures eased for a 5th month in September according to the New York Fed, and container/shipping costs are down by more than 75 per cent from their highs, and continue to plunge by the week;
-used car prices are now deflating hard. Even if they didn't fall any further from here - which they will - they'll soon be in double-digit decline territory, and even flat prices from year would result in -13 per cent over the year to December;
-US home prices and private sector measures of rents are now falling, and lumber prices have plummeted; and
-job openings are now posting sharp declines, jobless claims are rising, and the big chain and department stores are reporting falling demand, rising inventory, and indicators of imminent deflationary pressures.
And so on it goes.
Down Under
In Australia there were still notable construction cost pressures in Q3, and energy costs will still pack a punch over the remainder of the year.
The fuel excise cut ended in September, though unleased prices around here (in Elsternwick today) are still well below $2 per litre.
Overall, though, inflation expectations are well anchored and inflation pressures are set to fall away, with permanent and long-term arrivals and international students flooding back into the country to take the pressure off labour force capacity constraints.
SEEK's job advertisements series fell away by -5.2 per cent in September, with declines across the board.
Gareth Aird at the CBA has pointed out before that with very little sign of wage price spiral risks, the Reserve Bank can probably hike once more then take a long breather.
By next year the narrative will likely have shifted towards disinflation.
Ergo, one more hike then done?