Econosights – Page 3

Econosights: What are inflation expectations telling us? | AMP Capital

Econosights: What are inflation expectations telling us? Key points An increase in short-term consumer inflation expectations reflects the current high inflation environment. While consumers are assuming that inflation will remain elevated at its current level for the next 1-2 years, this is unlikely as forward-looking inflation indicators have been falling for months. Australian medium-term inflation expectations remain well anchored which indicates that the market believes in the RBA’s 2-3% inflation target and does not …

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Econosights: Australian housing – impacts from the fixed rate mortgage “cliff” and risks to housing construction | AMP Capital

In this Econosights we look at some of the current issues in the housing market, including the the expiration of fixed rate mortgages and the outook for residential construction… Econosights: Australian housing – impacts from the fixed rate mortgage “cliff” and risks to housing construction Key points A large chunk of home loans that have been recently fixed at ultra-low rates will roll onto a variable mortgage rate that is 2-3 times higher. This is …

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Econosights: How are consumers responding to higher interest rates? | AMP Capital

Econosights: How are consumers responding to higher interest rates? Key points Consumers are responding to higher interest rates: housing market indicators are slowing (home price declines have accelerated and auction clearance rates are falling), consumer sentiment is weakening and retail spending is slowing. This is the expected consumer response as interest rates rise. The RBA wants to see slowing economic activity to reduce current inflation and inflation expectations. The concern is around too many rate …

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Econosights: China – lockdowns, policy stimulus and regulatory burdens | AMP Capital

Econosights: China – lockdowns, policy stimulus and regulatory burdens Key points There are reasons to be optimistic on China: lockdowns are easing which will help to abate supply-chain related inflation, policy stimulus measures have significantly ramped up and more can be done and geopolitical tensions have room to improve with the change of government in Australia and potential roll-back of US tariffs before the November mid-term election. Chinese shares have been hit hard in recent …

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Econosights: The outlook for Australian wages | AMP Capital

Econosights: The outlook for Australian wages Key points Australian wages growth has been constrained because the supply of labour has increased since the beginning of the pandemic with the labour force participation rate now at a record high. High labour underutilisation over recent years has also kept a lid on wages growth. But, a tighter labour market, falling labour underutilisation, a higher inflation environment, a lift in the minimum wage and higher public sector wage …

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Econosights: Europe recession risks– implications from the war in Ukraine | AMP Capital

Econosights: Europe recession risks– implications from the war in Ukraine Key points Eurozone inflation is likely to be well over 6% per annum by mid-year from high commodity prices lifting electricity, gas and petrol costs. This will hit consumer spending. Risks of a Eurozone recession in the first half of 2022 are high. The US should avoid recession for now. The ECB appears too optimistic on the growth outlook despite the conflict in Ukraine which …

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Econosights: Inflation risks: implications from Russia/Ukraine war and the floods | AMP Capital

Econosights: Inflation risks: implications from Russia/Ukraine war and the floods Key points The Russia/Ukraine war is causing a big rise across many commodity prices including gas, oil, iron ore, coal and wheat. This will flow through to consumer prices. Flooding across the east coast of Australia will also put upward pressure on fruit and vegetable prices. We have revised our inflation forecasts higher to account for these impacts. We expect headline inflation to be just …

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Econosights: Four reasons to expect a softer US economy in 2022 | AMP Capital

Econosights: Four reasons to expect a softer US economy in 2022 Key points The US economy is facing numerous headwinds in 2022 which will slow US economic growth. Inflation is too high, interest rates are going to rise, the value of the Fed’s balance sheet will fall and fiscal “thrust” has turned negative. These factors are also leading to a peak in earnings growth. We expect lower equity returns in the US market in 2022 …

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Econosights: Should we be worried about an inflation breakout? | AMP Capital

Econosights: Should we be worried about an inflation breakout? Key points Current inflation concerns reflect a rise in consumer goods prices and a spike in energy costs. Most of the factors driving higher inflation reflect COVID related disruptions and should be temporary. But the inflation data is still likely to remain elevated over coming months. While a few central banks are starting to remove some monetary policy accommodation in response to inflation concerns, we don’t …

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Econosights: Inflation in the COVID-19 world | AMP Capital

Econosights: Inflation in the COVID-19 world Key points The money supply across major economies has skyrocketed from central bank asset purchases (or quantitative easing), government stimulus payments and wages building up in bank deposits. There is some concern that the boom in money supply growth could lead to an inflation breakout. However, prior surges in the money supply have not always led to higher inflation. Central bank quantitative easing programs are a big driver of …