Inflation expectations lower
The economy news begins to flow again this week, with retail trade and building approvals figures in focus, but with inflation figures probably the main highlight.
And not just in Australia!
US inflation expectations fell across the curve in today's news, with the 1-year inflation expectations index dropping down to just 3 per cent (from 3.4 per cent previously), broadly suggesting a return to the inflation target.
3-year inflation expectations also fell from 3 per cent to 2.6 per cent.
On Thursday this week, the official US inflation figures will likely show monthly inflation at +0.3 per cent (forecasters tend to be very accurate over there!), which should take the 6-month annualised pace for core inflation down to around 3 per cent.
There's plenty of scope for the rate of inflation year-on-year to keep falling over the next 6 months too, with markets expecting interest rate cuts from March onwards.
Back home
Australia's monthly inflation gauge for November will be released on Wednesday this week.
This is a new measurement and nobody can forecast it, but it seems likely that the annual rate will fall from +5.6 per cent in September, to +4.9 per cent October, and next to +4.4 per cent for November.
For various reasons Australia is further behind on the inflation journey, although the direction of travel is the same.
Crude oil prices slumped -4.5 per cent today, so that definitely won't hurt the disinflation narrative either!
It's generally shaping up to be a positive year for property and risk assets, with interest rates primed to fall over the next 18 months.
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