The European Central Bank hikes rates, but inflation fears over surging oil prices dominate attention, triggering another global bond market selloff. And ANZ Research changes its Fed rate call to three more hikes.
In our deep-dive interview, ANZ Economist Vicky Xiao Zhao analyses a recent large capital injection by China’s government into key financial institutions.
5 things to know in 5 minutes:
The European Central Bank has hiked its key interest rate by 25 basis points to 2.5% overnight, as expected, but another global bond market selloff is dominating the focus for traders and investors increasingly worried about inflation. The US 10-year yield rose 11.8 basis points to a 19-year high of 4.953%.
ANZ Research has upgraded its FOMC rate forecast - from on hold, to three more 25 basis point hikes starting in December. ANZ Head of G3 Economics Brian Martin says the call comes even though there is an underlying disinflation process in the US - at the moment.
Brian says persistent negative supply shocks, like the re-escalating Middle East conflict, are a key reason for the change in forecast.
ANZ Research says there is a chance the rate hikes could start as soon as this month instead of the December kick-off pencilled in. Attention now turns to US August CPI inflation data tonight. Henry expects a core reading of about 0.2%.
Turning to New Zealand, traffic movement data for August showed light traffic fell 1.2% in the month, while heavy traffic was down 2.2% - but was still up on a year ago, says ANZ New Zealand Chief Economist Sharon Zollner.
Cheers,
Bernard.
PS: Catch you next week with what US CPI inflation data tonight could mean for the Fed.
