Australian shares are set to open 1pc higher; Dow surges 500 points after US inflation cools. AMP, QBE, Telstra poised to report. Follow updates here.
“We think that it is too early for the market to be trading a full Fed pivot,”. “While we expect disinflation ahead due to the recent fall in retail gasoline prices and improvements in some supply chain measures, we think the near-term inflation picture is likely to remain uncomfortably high.
“We forecast year-over-year core CPI inflation of 6.1 per cent in December 2022, and expect core goods and services prices to remain firm on a sequential basis, in part due to ongoing firmness in shelter inflation. We therefore think it will take until early next year for inflation to decline enough for the Fed to stop hiking.”: “Since February 2020 , consumer prices are up at a 5.6 per cent annual rate and core prices are up at a 4.2 per cent rate.
“Nevertheless, the CPI report’s suggestion that the long-awaited peaking of inflation may have arrived was good news for stock and bond investors. It was bad news for the dollar, which is more good news for stocks. In addition, the purchasing power of consumers during July certainly got a boost from the flat CPI.
“At this point, I think a reasonable perspective would lean heavily against the view that one softish CPI print would dissuade the Fed’s hawks. They may trade-off the one CPI downside surprise against the ongoing tightening in the US job market and concern that wage pressures present the risk of more persistent inflation. In any event, I continue to think we’re dealing with longer wave forces and it’s silly to think one inflation reading settles anything.
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