The 2Q’22 Australia inflation rate will give more reasons to hike rates aggressively in the near-term. The July Fed meeting will likely produce another 75-bps rate hike. Stagflation is becoming more likely for the Eurozone.
The US economy is clearly going through a rough patch, at least when you look at topline GDP estimates. According to a Bloomberg News survey, the initial 2Q’22 US GDP report is expected at +0.5% annualized from -1.6% annualized in 1Q’22. However, b
ased on the data received thus far about 2Q’22, the Atlanta Fed GDPNow growth forecast is now at -1.6% annualized, down from -1.5% on July 15. The downgrade was due to “second-quarter real residential investment growth [decreasing] from -8.8% to -10.1%.
The European Central Bank is raising rates to arrest inflation pressures, but growth is slowing thanks to significant pressure in energy markets resulting from Russia’s invasion of Ukraine and the ensuing sanctions. Fragmentation of the bond market is a concern, with echoes of the 2010s Eurozone debt crisis getting louder. Needless to say, the Eurozone is in a tough spot. The July Eurozone core inflation rate is due in at +3.8% y/y from +3.
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