The US$ is strong above 146.4 yen after the Fed warned inflation was still too high and it may have to hike again. Traders are on high alert for BoJ intervention.
In our bonus deep-dive interview, ANZ Group’s Chief Economist Richard Yetsenga looks beyond cyclical inflation to where structural inflation is stronger.
5 things to know
Jerome Powell said US inflation was too high and may force the Fed to hike again. The US 2-yr T-bond rose to 5.07% and the US$ rose to over 146, a key level the Bank of Japan intervened at before.
ECB President Christine Lagarde also talked tough at Jackson Hole about inflation, and structural inflation in particular. ANZ’s Head of G3 Economics Brian Martin says underlying inflation is the Fed’s main problem.
ANZ Australia Economist Maddy Dunk says state CBD spending is down and remains below pre-Covid levels, but the fall is less in Sydney and Melbourne, where big office employers have called workers back.
China’s property sector consumes 37% of China’s steel and its downturn will hit demand, ANZ’s Senior Commodity Strategist Daniel Hynes says.
Australian markets will watch for retail trade data later on Monday and CPI inflation data on Wednesday.
Cheers
Bernard
PS: Look out for a deep-dive tomorrow on how the RBA might accelerate the unwinding of its Quantitative Easing during Covid lockdowns.
