Aus inflation

Aus monthly CPI looking better (3.4% yoy, see the 3rd row, second column).

Monetary transmission working well given the enormity of variable rate mortgages in a highly geared economy, where the cashflow impact is more immediate.

You can see the moment the print drops, 10s lower, dollar down (in the first moment) and risky assets a touch higher.

We remain of the view that inflation will be successfully tamed by central banks globally.

The below graph from Zac Gross (academic) is quite illustrative. On a 3m moving average basis, we are already there.

The below spreadsheet, created in response to news that the median pre-tax salary had hit $100K, was a touch grim.

Not really related to this note about inflation, but definitely a commentary on interest rates, which at the end of day, are determined (in level terms) by expected inflation (and expected inflation and actual inflation converge over a long enough time frame; people don’t “keep getting surprised” year after year, on average).

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.