- Consumer sentiment fell 4.7% to 80.4 in October on the Westpac-Melbourne Institute index, taking it back to April’s lows and some 20% below its long-run average. Weakness was evident across all subcomponents, with a particularly sharp deterioration following the latest RBA rate increase.
- Family finances were hit hardest, with higher interest rates and fuel costs driving the family finances versus a year ago sub-index down 8.0% to 66.9. Expectations were similarly downbeat, with more than 80% of respondents surveyed after the RBA decision expecting mortgage rates to rise further over the next year.
- After reaching multi-decade highs recently, global yields have paused or pulled back, with US short-end yields rolling over as softer PCE and payrolls data eased the urgency for further Fed hikes. The 2yr now sits at 4.79% after touching 4.95% last week and the 10yr eased to 5.28%, while oil has also moderated, with Brent holding around US$100/bbl.
- Coming up, the September FOMC minutes are released early tomorrow and should shed more light on the debate behind the Fed’s decision to begin tightening and the likely extent of further increases. While markets are pricing only a 20% chance of a hike at the next meeting, a full hike is priced by year end.
