The latest Westpac-Melbourne Institute Index of Consumer Sentiment for Australia declined 1% for the month “amid mounting concerns around the newly emerging omicron variant and the continued circulation of COVID cases in the country.”
The big concerns for consumers is now inflation and interest rates as specufestors and Bunnings Addicts Anonymous take a deep breath realising the equity they used to purchase new dog box and renovate their dog boxes is going to end up being more expensive then they realised. To wit:
In December 2020 only 5% of respondents recalled any news on inflation. This has lifted to 21%, exceeded only by news on employment (33%) and economic conditions (32.5%). Assessment of the quality of inflation news has deteriorated sharply from 56% describing the news as good a year ago compared to 71% describing it as bad in the latest survey.
There has been a similar shift in the assessment of news around interest rates (17% respondent recall). A year ago, 58% of consumers reported good news on interest rates but now 60% are reporting negative news on this front. On the other hand, the assessment of news around the widereconomy and employment remains positive, albeit somewhat softer than earlier in 2021.
And we’re likely to see the continued exodus from Victoria and NSW – the Great COVID States – to the lands of plenty – QLD/WA – which are recording much higher levels of sentiment and opportunity:
There was a clear difference in responses between the states hit hardest by recent Delta outbreaks and the rest of Australia. Both NSW and Victoria posted significant falls (down 3.6% and 3.5% respectively) while sentiment was up in Queensland (3.4%), WA (3.2%) and SA (7.1%).
It seems the cat is well and out of the bag COVID-wise for any Santa rally going into Christmas, at least in local stocks and the Australian dollar, which is pressing on the 71 handle against USD:
This volatility is mainly due to the leadup in the Fed’s FOMC meeting later today, where its expected a hawk will rise from the ashes to smite the inflationary demons besetting the USA. This will have a big uplift on USD against, well, everything if the steps taken exceed market expectations.