In-case-you-missed-it Monday: the real stories that mattered in the financial papers this week.
INFLATION
First up, inflation came in cooler than expected (Huzzaah!), falling to a two year low, and falling quickly.
This brings us into step with the global experience, where inflation is quickly becoming yesterday’s boogey-man.
And with inflation cooling quickly, any prospect of a rate hike this week were completely blown out the water. Markets are now firmly pricing in two rate cuts by the end of the year.
TAX CUTS
Amid all the noise about the changes to the stage three tax cuts, I thought it was worth sharing these charts from CBA, which show that amount of income tax paid is growing at a very fast clip, well ahead of incomes.
This seems to be largely due to break creep, as wages grow at a relatively fast clip. But it does mean that the tax to income ratio has soared to record levels.
The upshot? We all deserve a tax-cut.
WOBBLY BANKS
The smaller regional banks in America are back in the spotlight again, as U.S. regional banking shares tumble for second straight day.
A few months ago, we saw a number of banks get into trouble, as rates rose and they were caught out in a yield mismatch.
This time though it’s around their exposure to the commercial property sector, which world-over, is still struggling to get back to full occupancy. (Property warnings hammer banks on three continents.)
There’s quite a correction underway in commercial (particularly office tower) property prices, with some fearing that we’re not quite done.
It’s not panic stations yet, but it’s one to watch.
And that’s (pretty much) everything worth knowing this week.
JG.