Aus inflation

Aus inflation back to behaving itself, with any luck, printing 4.9% on the monthly release for YoY (see third row, 4.7% and 4.9% YoY).

Market likes it, overall, as do the duration/rate-sensitive parts of the market.

A common refrain is that we are just 6-9 months behind the rest of the world. Slower to emerge from COVID, slower to start hiking, and so those processes are reflected in our hithertofore more modest progress on inflation.

In our view, the odds of a soft landing are quite low, for Australia (a better chance abroad, of successfully pulling it off) given the starting point of household debt, property prices and proportion of adjustable rate mortgages.

That said, if nothing else, today’s number does make last month’s print look more like an aberration (5.6% prior, which made everyone very nervous about whether it was forming-a-base/set-to-rebound/not-really-quite-under-control).

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