Big Data This Week To Set The Course

Big week ahead on the data front and this will dictate where markets go in the coming months. The biggest will be US inflation numbers which are out late Wednesday evening Asian time.

The market is expecting the inflation rate to moderate slightly from the scary 9.1% annual change printed last month.

If we see a decline, it will ease market expectations and perhaps start to bring back longer-term bond yields.

But if we get a blowout, particularly in the context of strong employment numbers in the US last month, it could start to get ugly with more aggressive rate rises on the cards.

We think that the inflation rate has peaked and will look towards the numbers with interest, particularly the components such as energy and housing costs.

The US housing market is already showing signs of cooling and oil prices have continued to stay around the US$100 market for most of the month. There is a sense of things starting to slow down, the rate of the slowdown is key to watch.

In Australia we’ll be keeping a close eye on the consumer confidence numbers out tomorrow to see how much damage the recent RBA rises have actually been doing.

Last month’s confidence numbers were shocking, so we’ll be watching to see if a trend is forming. If sentiment is weak, that might provide some comfort to the RBA that rises are doing their job and slowing down spending.

Bottom line: This week is all about inflation and the direction of interest rates, which dictates all asset prices across the economy.

Market insights and analysis from Peter Esho, co-founder at Wealthi, Sydney-based property investment company.

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