US prices grew faster than expected in January, reducing hopes for a March rate cut by the US Federal Reserve. The strong reading sent global stock markets lower, while US bond yields and the US dollar surged.
In our bonus deep dive interview, ANZ Economist Arindam Chakraborty looks at how a US ‘friendshoring’ pivot away from China is pushing up US costs and prices.
5 things to know
The US CPI rose 0.3% in January from December. Markets expected 0.2%. ANZ’s Head of G3 Economics, Brian Martin says the data takes a March rate cut off the table.
Brian says markets are pricing in a rate cut in June. He sees the Fed waiting until July to be sure enough pressure is coming out of the US economy.
Business confidence about Australia’s economy improved in January, but businesses’ confidence about their own conditions fell to just below the long-run average. ANZ Economist Maddy Dunk says higher cost and price pressures make the RBA’s job a bit harder.
The ANZ Roy Morgan measure of Australian consumer confidence dipped in early February, but economic confidence for the year ahead rose to levels not seen since the RBA started hiking rates in May 2022, says ANZ Australia Senior Economist Adelaide Timbrell.
The RBNZ’s survey of business leaders and forecasters for February found lower inflation expectations, but the one and two-year measures remain higher than the RBNZ wants, ANZ NZ Economist Henry Russell says.
Cheers
Bernard
PS: Look out tomorrow for a preview of the latest Australian jobs data.
