Australian inflation was faster than expected in the September quarter, which has prompted ANZ’s economists to forecast a rate hike on Melbourne Cup day.
In our bonus deep-dive interview, ANZ’s Senior International Economist Tom Kenny explains what the term premium is, how it’s changed and why it matters.
5 things to know
The Nasdaq is down 2% by 5am AEST after Alphabet (Google) reported weak cloud revenues. A 12 bps jump in the US 10-year bond yield to 4.96% also hit sentiment. The A$ fell to 63.14c and the NZ$ is weak at 58.11c.
Australian CPI inflation of 1.2% in Q3 was above forecasts, which prompted ANZ’s economists to change their RBA call to a 25 bps hike on November 7.
ANZ Australia Senior Economist Catherine Birch says a re-acceleration in local inflation means overall inflation isn’t likely to come down fast enough for the RBA’s liking.
Major swings in fuel prices, electricity prices and childcare costs were also factors in the inflation result, Catherine says.
Gold rose US$8/oz at US$1,994 overnight. Usually it falls when real bond yields rise. ANZ’s Senior Commodities Strategist Daniel Hynes says that inverse relationship has broken down recently because of safe-haven buying and demand from some central banks wanting to diversify out of US$ assets.
Cheers
Bernard
PS: Look out tomorrow for an expected ECB hold and US GDP data due tonight
