Weekly Market Update | 8 November 2022

 

Key economic releases last week

  • The RBA hiked rates by 0.25% to 2.85%, in-line with consensus expectations despite recent stronger than expected inflation and spending data but the RBA expects further hikes to continue.
  • US Federal Reserve hiked rates by 0.75% to 3.75-4% as the market expected and continued to signal additional hikes in order to bring down inflation.
  • US labour data was stronger than expected and job openings surprisingly rose. The US added 261k jobs compared to the 200k consensus, with wages rising 0.4% MoM and 4.7% YoY, though the unemployment rate rose to 3.7% from 3.5%.
  • US, EU, Australian Purchasing Manager Indices (PMIs) continue to fall with EU readings indicating contraction. US and Aus manufacturing PMIs remain resilient and in expansionary territory.
  • Aus retail sales grew 0.6% again as the consumer remains strong despite tighter monetary policy.
  • EU preliminary inflation readings continue to overshoot expectations with core rising 5% YoY and headline rising 10.7% YoY. GDP was weaker than expected, growing just 0.2% QoQ compared to the 1% consensus estimate.

Key releases for the week ahead

  • US inflation
  • Australian consumer sentiment and business survey
  • China inflation

Chart of the week

 

 

 

 

 

 

 

 

 

 

 

 

 

US wage growth is proving to be sticky and is still too high, with median wage growth nearing 7%. This high wage growth makes controlling inflation harder as it risks entrenching an inflationary feedback loop. The US Fed will likely keep on hiking rates into 2023 in the hopes of snuffing this high level of wage growth which will be necessary to bring inflation back to their target band.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Tuesday 08 November 2022, 4.30pm

For more information on the above please contact Bentleys Wealth Advisors directly or on +61 2 9220 0700.

This information is general in nature and is provided by Bentleys Wealth Advisors. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decision based on this information.