Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Australian dollar tumbles on stagflation fear
Australian dollar tumbles on stagflation fear
By David Llewellyn-Smith   |  Nov 10, 2021 09:48
Saved. See Saved Items.
This article has already been saved in your Saved Items

DXY was down a little last night and EUR up:


The Australian dollar tumbled:

Gold and Oil were up:

Base metals were mostly soft:

Big iron got creamed with futures:

EM stocks are quite unconvincing:

Junk is warning again:

United States 2-Year puked stagflation bigly:

Hot off the press: stonks fell!

Westpac has the data wrap:

Event Wrap

US PPI inflation in October matched expectations at 0.6% m/m and 8.6% y/y, with the ex-food and energy measure steady at 6.8% y/y which is a record high. Large energy price gains in November, alongside worsening supply chain bottlenecks, suggest that the y/y gains will continue to rise into year-end, even as base-effects dissipate.

FOMC member Bullard repeated that the Fed may have to move faster if inflation pressures persist. He forecasts an unemployment rate near 3%, noting the labour market is very tight and will remain so, with GDP growth over 4% next year. Daly expressed a more dovish stance, saying that given the high degree of uncertainty in the labour market and on inflation, the best approach is to hold steady. She warned there might not be clarity until summer 2022. She called inflation “eye-popping” but still expects pressures to wane, and worries that a premature hike in rates might cause unnecessary pain in the economy.

Event Outlook

Aust: WBC-MI Consumer Sentiment could receive a boost from the continued easing of restrictions and rising vaccination rates in November. Weekly payrolls will reveal the strength of the NSW recovery during the two weeks to October 16.

NZ: October REINZ house sales are expected to report a lift as Covid restrictions ease. House prices are likely to maintain the momentum carried through the delta lockdown.

China: The October CPI release will highlight persistent weakness in consumer inflation (market f/c: 1.3%yr) despite robust upstream price pressures (PPI market f/c: 12.4%yr).

US: October’s CPI result is expected to be driven by a lift in core prices (Westpac f/c: 0.5%, market median 0.6%). The gradual downtrend in initial jobless claims should continue. The final release of wholesale inventories for September is also due.

No matter how hard the stagflationistas push, they can’t get the equity market to give up on GAMMA nor Treasuries to sell. For good reason.  These PPI numbers are yesterday’s news. What is coming is deflation as supply-side bottlenecks clear through the Xmas lull, the global economy slows via the US and China and commodity prices crash. All made worse by the locked-in taper and a rising DXY.

Importantly, PPIs won’t just fall to zero, they will plunge negative for many months across 2022.

It is all very AUD negative.

Australian dollar tumbles on stagflation fear

Related Articles

Chris Becker
18.05.22 Macro Morning By Chris Becker - May 18, 2022

Last night saw a bigger bounceback on stock markets with both European and US shares properly extending their recent gains, helped by a weaker USD. The reaction to Fed Chair...

Australian dollar tumbles on stagflation fear

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email