You’ve heard of COVID-tentativeness, but what’s petrol-tentativeness?
Investors across the world are quickly coming to terms with the new normal: higher interest rates.
Reserve banks in New Zealand, the US and UK have either increased rates already, or said they’re going to do so soon.
But not in Australia, where with a federal election looming, the RBA is going to sit on its hands for at least a while longer.
However, unlike the RBA, inflation doesn’t have the option to sit around and watch the show and is steadily on the increase.
This week the world is watching how the US Federal Reserve will react to intensifying price pressures, with many investors eyeing Thursday’s consumer price index data release (Friday morning our time) as a key event for markets this week.
The inflation data is expected to show that prices rose 0.4% in January, for a 7.2% gain from one year ago, which would be the highest in almost 40 years.
So, while we may not be feeling the pain on our mortgages just yet, we can expect to feel it at the bowser with petrol prices set to push through the $2 per litre mark soon, which I predict will cause a lot of people to consider whether the drive they were planning is actually necessary.
In an economy that’s already hurting from COVID-tentativeness, the last thing our hospitality and travel sectors need is petrol-tentativeness to keep us at home and our wallets in our pockets.
From a share market point of view, the Nasdaq has suffered massive losses since December on the fear that growth investors will move to safer havens (bonds with yield or shares with dividends) due to global interest rate rises. That movement has been reflected in our market with Z1P, XRO, and Afterpay now suffering, with all three weaker since December 2021.