The biggest moves across Global Markets have been seen in the US rates market, where break-even inflation rates have jumped by a full 10 basis points at both 5 and 10 years.

The S&P 500 has extended its winning streak to a sixth day with mixed earnings and a subdued Fed Beige report not enough to derail the positive vibes

If the market is rethinking how soon the Fed might lift rates, there was nothing from incoming Fed speakers overnight to support this view.

In this Weekly, we look at some of the key risks around the Australian inflation outlook in the context of measured inflation turning higher globally.

Although the US is less exposed to the energy crunch, supply bottle necks are still affecting its economy, particularly in sectors there is a shortage of workers, raw materials, and chips.

Inflation fears are clearly lifting, with the latest driven by the rise in energy prices.

The sun has been shining on risk sentiment, commodity prices and commodity currencies overnight

With markets having aggressively pushed Fed pricing into 2022, it is likely there is some thought that such a tightening will weigh on demand earlier.

The ‘Quit Rate’ is the highest on record, reflective of the ease which workers are switching jobs, in part at least for better pay or conditions elsewhere.

We are unlikely to get a true read of the underlying pace of inflation until mid-2022, with both transitory and policy driven impacts continuing to play out.

The rise in energy prices is fuelling concerns that the transitory lift in inflation seen in the wake of the pandemic may prove to be longer lasting.

US September payrolls were a big miss, but strong revisions to prior months alongside a decline in the unemployment rate and lift in hourly earnings resulted in a relative subdued reaction by markets, suggesting the figures were strong enough to keep the Fed on track to begin its QE tapering programme in November.

Risk asset have enjoyed a solid rebound overnight following news that the US Senate had reached an agreement to extend the debt ceiling through early December.

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