Reply To: Traders Market Weekly: Inflation Obsession in Worsening Liquidity


Japan’s September Tokyo CPI 2.8% yr/yr (prior 2.9%) and Tokyo core CPI 2.8% yr/yr (expected 2.8%; prior 2.6%); Monetary Base -3.3% yr/yr (expected +0.6%; prior +0.4%)
Australia’s August Building Approvals +28.1% m/m (expected +5.0%; prior -18.2%)
South Korea’s September Nikkei Manufacturing PMI 47.3 (prior 47.6)
The RBA excited the stock market masses with a decision to raise its cash rate by only 25 basis points, instead of the 50 basis points expected, to 2.60%.
The decision was tied to a recognition that the cash rate has been increased substantially in a short period of time, and a desire among RBA officials to see how the prior rate increases are affecting the outlook for inflation and economic growth.
The strong response by the All Ordinaries (+3.7%) and other indices open for trading (Hong Kong and China were closed for holidays) has now left European bourses and the U.S. equity futures market following their lead.
The policy response has overshadowed the news that North Korea fired a missile over Japan for the first time since 2017 and that Tokyo’s core CPI, up 2.8% yr/yr in September, hit its highest level since 2014.