Things looks good on the inflation front for Australia, also. Most measures comfortably below consensus…

…and trending lower over time, back towards target.

We’ve seen recent weakness in employment numbers, and retail sales data. The inflationary impulse is clearly gone, and perhaps if one struggles to accept that framing [and in fairness we’ve only ever been a print or two away from altering the narrative] at least one can say the inflationary impulse is vastly less than it used to be.

To the degree that global economic conditions and similar monetary and fiscal policy settings drove observed inflationary outcomes, the ongoing decline in US/UK/EU also bodes well for further declines in Aus.

Good numbers, in sum, and the risk of an overshoot (hard landing) to our mind remains high, driven mostly by Australia’s Achilles heel, namely housing.

Movements in the dollar and rates match the surprise (e.g. actual vs consensus), and are consistent with a “dovish” monetary shock at the margin. The RBA, like everyone else, will open the door more fulsomely to rate cuts in due time in their commentary and outlook.

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