Aussie dollar rockets higher

Dollar on fire

Back in October there had been some discussion about whether the Aussie dollar could plunge if the Reserve Bank didn't hike interest rates urgently higher, and quickly.

The argument was that imported inflation could surge as a result.

In the event, the Aussie dollar has absolutely blazed higher from 62 cents towards 70 cents. 

In reality, low interest rates weren't the main driver of the sudden spike in inflation, and the forthcoming freefall in inflation mostly won't be due to the rate hikes either.

The 3-year bond yield ticked down to 3.1 per cent. 

Podcast 2022

2022 podcast stats

Bit of a summary of last year's podcast.

You can check out the recent episodes on Spotify here or on Apple Podcasts here.

20-video series #12

20-video series

The latest instalment in my video series is here (or click on the image below):

US inflation falls

Inflation dropping

US CPI fell -0.1 per cent in November, after the flat result in October.

Annual inflation therefore fell to 6.5 per cent, from 7.1 per cent last month, in line with market expectations.

That's the 6th consecutive decline, and the lowest annual figure since October 2021. 

Core inflation also dropped to 5.7 per cent over the year, which was the lowest level since December 2021.

Source: BLS

Overall, this was a soft figure and exactly in line with market expectations, suggesting that the peak of the interest rate cycle is getting closer, with a 25 basis points increase essentially locked in for next month. 

The odd thing was that by far and way the biggest contributor was still rents, which apparently continued to soar. 

That seems unusual, because in real time all private market measures show that rents are actually declining, so presumably once this feeds into the official inflation figures then we'll be in inflation freefall. 

Commodity prices deflating; tourism rockets back

Imports drop

Imports fell -1.5 per cent in November, with a decline in capital goods volumes and car imports.

Exports also fell, but less so, driving another large trade surplus for Australia of $13.2 billion for the month. 

Commodity exports have been sky-high over the past year, driving total exports of $59 billion over the month, but these figures are now rolling over as gas and coal prices follow iron ore lower. 

Tourism services exports bolted back to $3.9 billion in November, having been under $1.6 billion a year earlier. 

There's still a way to go - tourism exports hit a monthly peak of nearly $6 billion in 2019 - but things are heading in the right direction.

Commodity exports are only going down from here.

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The mild winter weather in Europe has continued, and is expected to continue for the next week or so, before a cold snap bites. 

The good news is that wholesale electricity and gas prices have reverted back to normal levels. 

Rents see largest ever annual increase

Rents rocketing

CoreLogic has previously reported a record low supply of dwellings available for rent.

Source: CoreLogic

It's worth noting that some areas are faring much worse than others in this regard.

Domain's quarterly rents report ha snow shown rents rising to a record level in December, recording their biggest ever annual increase in 2022.

In particular unit rents are going up at an electric pace, especially in Sydney and Melbourne.

Source: Domain

Domain's full quarterly report is here. 

20 video series #11

20-video series

Here's the latest in my 20-video series. 

Tune in here (or click on the image below):

Job vacancies decline for 6 months

Job vacancies declining

Job vacancies declined by a further -5 per cent over the 3 months to November, down to a still elevated 444,000.

Job vacancies remain at or close to historic highs in Queensland and South Australia, but are easing in Sydney and Melbourne as roles are now being filled. 

The number of unemployed persons ticked up from 484,000 to 492,000 in November, but conditions are still very favourable for those seeking work. 

Total job vacancies remained elevated last year, but the labour force is also expanding rapidly, up by well over 400,000 over the year to November, to a record high of 14¼ million. 

It's possible that we haven't yet seen the lowest unemployment rate for this cycle, but we're close to it, as construction and trades work begins to slow down. 

Somewhat old news, here, but evidently there will still very high numbers of retail and hospitality vacancies in particular in November. 

As far as I have been able to tell at the Sunshine Coast, these required roles have now largely been taken up by working holiday makers, students, and other new arrivals, and things are coming nicely back into balance as immigration ramps up.