However, as always, the details will provide the underlying story. How will higher energy prices impact CPI? Dominique agrees with the consensus and expects core inflation to rise 0.2% MoM. ‘Inflation is coming down, the labour market remains strong and the economy is operating at a high level of capacity utilisation, although growth has slowed’. Much of the statement was as expected, but Governor Lowe did hint at a slowing economy: Despite this, the Aussie dollar weakened last week by 1.2% (Charts 1 and 2). In line with market expectations, the RBA kept rates unchanged at 4.1%. Large reductions in commercial crude inventories continue to support oil higher however, it looks like much of this increase was priced in given the bulk of Brent’s move occurred before the release. Diesel stocks rose by 0.7mn barrels, while other oils saw a much larger stock build. The BoJ will continue to watch signs of domestic strength and further wage pressure before tightening, and this report supports their stance to stay dovish.īrent continued its march higher! EIA data showed US commercial crude inventories fell by 6.3mn barrels while gasoline stocks also fell by 2mn barrels. A rebound in auto-related exports is one reason for the strong foreign demand and has boosted the Japanese economy to date. Driving this increase was foreign demand, which rose 1.8% QoQ, while private consumption fell 0.6% QoQ. Japanese GDP came in at 1.2% QoQ, up from 0.8% previously. Inflation is moderating: ‘Most Districts reported price growth slowed overall’ vs ‘Prices increased at a modest pace overall’.The labour market is cooling: ‘Job growth was subdued across the nation’ vs ‘Employment increased modestly this period’.To put things in context, Q2 growth was 2.1% while the Atlanta Fed GDP nowcast for Q3 is currently 5.6% (although this will likely get revised lower by the end of Q3). Real GDP growth has picked up: ‘Economic growth was modest during July and August’ vs ‘Economic activity increased slightly since late May’.The quarterly Beige Book was released last week, continuing to point to strong growth, falling inflation and a loosening labour market. Last Week’s Highlightsīeige book pointed to goldilocks. We standardise WoW price changes across different markets to allow for cross-market comparisons. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more. This article is only available to Macro Hive subscribers.
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