Round trip for oil
Since the open/hot war phase of the conflict in Iran began in February 2026, Aussie households have endured three interest rate hikes taking the cash rate target back up to a cycle high of 4.35 per cent, as the central bank tackled the anticipated wave of inflation.
And yet futures markets have seen all of the wartime increases in oil futures erased.
Today, crude oil prices are trading all the way back down at $68/barrel.
Bloomberg described how a peace deal has unleashed a wave of oil supply, overwhelming buyer demand for oil.
Confidence crunched
Today, the Melbourne Institute released its monthly inflation gauge for the month of June, which came in at -0.4 per cent for the month, helped by lower fuel prices.
The annual headline inflation figure fell sharply from 4.4 per cent to 3.9 per cent, while the trimmed mean inflation figure also declined sharply.
Shane Oliver from AMP with the chart:
Source: Shane Oliver, AMP, Melbourne Institute
Obviously this index isn't watched as closely now the ABS has a monthly inflation index of its own, but if this result is replicated in the ABS measures in June that will be a good thing.
It also raises the question of how soon interest rates will be on the way back down again to prop up the ailing Aussie economy.
Confidence in the Aussie economy has been crunched since the Federal Budget was released in May, with housing market activity also drying up.
Last week the ABS reported a new series of underemployment and underutilisation measures, which underscored that the youth underemployment issue is becoming significantly very quickly.
Justin Fabo of Antipodean Macro showed how the slowdown in hiring is disproportionately impacted younger Aussies.
Source: Justin Fabo, Antipodean Macro, ABS
It's also worth noting that measures of construction activity have completely collapsed since the Federal Budget.
Noted AIG:
Source: AIG
Markets a still pricing a chance of a hike later in 2026, for now, but it looks like the economy is going to pretty cooked in the current environment.
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