Week in review
- Australian inflation 3.4% y/y in November
- Eurozone inflation 2.0% y/y in December
- U.S Job openings softer at 7.146m in November
Week ahead
- Australia consumer confidence
- U.S. CPI inflation
- U.S. retail sales
Thought of the week
The November inflation figure was slightly better than expected, but the RBA is still likely to pad away any rate move at its February meeting. Headline inflation moderated to 3.4% y/y in November, while core inflation eased to 3.2% y/y. The new monthly inflation series provides the RBA with more timely information ahead of its meetings, though it may initially be less reliable. The limited data series is more susceptible to seasonal distortions and can contribute to monthly volatility. Meanwhile, the roll-off of electricity subsidies is likely to add a little more swing. While the market is still pricing a more than 30% chance of a February rate hike and almost two by the end of the year, the November inflation will not have shifted the RBA’s defence. We expect then to keep a straight bat this year, holding rates the current level and likely only moving higher in 2027. This makes the carry in the Australian bond market more attractive.
Pace of inflation dipped in November but remains above the target band
Year-over-year
Source: ABS, FactSet, J.P. Morgan Asset Management. Data reflect most recently available as of 09/01/26.
All returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.
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