Rate-hike bets, China watching Port of Darwin, US Fed decision

Inflation data points to RBA rate hike

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Good morning. Traders are betting on a rate hike next week after key data yesterday showed inflation is accelerating and in breach of the Reserve Bank's target. It's not good news for those with a mortgage, or for the RBA as it would be an awkward about-face less than six months after it last reduced borrowing costs. Meanwhile, China is closely watching how the Albanese government handles the status of the Port of Darwin. - Paul-Alain Hunt, Metals and Mining Reporter What's happening now Australia's core inflation remained elevated last quarter, suggesting price pressures aren't abating at the desired pace and providing the Reserve Bank with further evidence that interest rates may need to move higher. The data has led traders to boost bets on a rate hike next week and some economists to predict the RBA will tighten policy to ensure inflation returns to the target. Beijing is "watching very closely" how Canberra handles the status of a port currently leased to a Chinese firm that the Labor government has pledged to return to local control, and will step in if necessary, China's envoy to Australia said. If the port was taken back via forced sale, Beijing has an "obligation to protect the legitimate rights of Chinese companies overseas," Ambassador Xiao Qian told reporters in Canberra on Wednesday.  Australia's credit market is becoming a favored destination for investors seeking alternatives to dollar investments, driving local bond deals to a record. Sales of company and government debt have reached a record A$50.7 billion ($35.6 billion) so far in January, according to data compiled by Bloomberg. ANZ Group Holdings Ltd. plans to bring its Singapore staff together under one roof in the second half of the year, combining employees from two offices in a new city-center location, according to people familiar with the matter. ANZ joins other banks in the city-state grappling with conflicting goals of trying to reduce office costs while at the same time seeking to keep premier city-center spaces which have long been preferred by financial and technological giants. An initial Australian canola cargo has cleared inspection in China, raising hopes that trade volumes could pick up after a lengthy halt in flows. China has completed customs checks for at least one Australian canola cargo and is expected to crush the oilseed this week, according to people familiar with the matter. It is among at least two shipments that arrived in Chinese ports in recent weeks. What happened overnight Here's what my colleague, market strategist Mike "Willo" Wilson says happened while we were sleeping… The S&P 500 briefly topped 7,000 after the Federal Reserve left rates unchanged but kept cuts on the table saying later that policy may be neutral or somewhat restrictive. After the comment, the dollar trimmed a bounce while kiwi and Aussie held their Trump-induced spikes. The yen sank after Treasury Secretary Scott Bessent said the US is "absolutely not" intervening in the market for Japan's currency. Australia has some export price data while New Zealand sees a gauge of business confidence and activity. ASX futures point to a staid start for local equities. US Federal Reserve officials left interest rates unchanged and pointed to improvements in the US economy as they signaled a more cautious approach to potential future adjustments. The Federal Open Market Committee voted 10-2 Wednesday to hold the benchmark federal funds rate in a range of 3.5%-3.75%. Liquidators of China Evergrande Group are expected to receive binding offers from buyers for the firm's Hong Kong-listed property management unit as soon as the end of this month, according to people familiar with the matter. Private equity firms including Trustar Capital are evaluating whether to move ahead with a bid for Evergrande Property Services Group Ltd., said the people, who asked not to be named because the matter is private. At least one Guangdong-based state-owned buyer is also considering making a proposal, the people added. Residential buildings at the Evergrande Palace project, developed by China Evergrande Group, in Beijing, China. Source: Bloomberg Indian stocks are on track for their worst start to a year in a decade, piling pressure on Prime Minister Narendra Modi's administration to deliver fresh catalysts for economic growth in the upcoming budget. Indian markets are under pressure across assets, with stocks, the rupee and bonds all weakening, leaving investors banking on the budget to reset sentiment. President Donald Trump warned Iran to make a nuclear deal with the US or face military strikes far worse than the attack he ordered last June, increasing pressure on the regime and propelling oil prices higher. In a social-media post on Wednesday, Trump said the fleet of US ships he'd ordered to the region, led by the USS Abraham Lincoln aircraft carrier, is "ready, willing, and able to rapidly fulfill its mission, with speed and violence, if necessary." What to watch • ANZ Business Confidence Data, 11:00 A.M. Sydney • ANZ Activity Outlook Data, 11:00 A.M. Sydney • Australia Export Price Index Data, 11:30 A.M. Sydney One more thing... Saudi Arabia is reviewing its most ambitious projects, including those in Neom, Jeddah, and Riyadh, and making tough decisions on spending. The moves accelerate a reckoning that began in late 2023, when the government first signaled potential delays to some projects. Multiple endeavors have since been curtailed as the kingdom seeks to shift course amid weak oil prices. Rendering of the planned Neom stadium. Saudi Arabia FIFA World Cup 2034 Bid Team We're improving your newsletter experience and we'd love your feedback. If something looks off, help us fine-tune your experience by reporting it here. Follow us You received this message because you are subscribed to Bloomberg's Australia Briefing newsletter. If a friend forwarded you this message, sign up here to get it in your inbox. Unsubscribe Bloomberg.com Contact Us Bloomberg L.P. 731 Lexington Avenue New York, NY 10022 |