The Global Fight Against Inflation Has Turned a Corner
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    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,581,977 (+0.10%)       Melbourne $970,512 (+0.23%)       Brisbane $885,023 (+0.03%)       Adelaide $813,016 (+0.20%)       Perth $760,003 (-0.11%)       Hobart $733,438 (-1.28%)       Darwin $643,022 (-0.79%)       Canberra $970,902 (+1.87%)       National $1,000,350 (+0.23%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $721,725 (+0.37%)       Melbourne $488,237 (-0.76%)       Brisbane $495,283 (+1.37%)       Adelaide $404,022 (-2.77%)       Perth $405,420 (-0.69%)       Hobart $498,278 (-1.60%)       Darwin $339,700 (-0.58%)       Canberra $480,910 (-0.04%)       National $502,695 (-0.26%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 10,626 (-230)       Melbourne 15,220 (+56)       Brisbane 8,417 (-24)       Adelaide 2,720 (-9)       Perth 6,897 (+56)       Hobart 1,234 (+5)       Darwin 281 (+5)       Canberra 1,079 (-30)       National 46,474 (-171)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 8,563 (-253)       Melbourne 8,007 (-12)       Brisbane 1,824 (-34)       Adelaide 493 (-16)       Perth 1,902 (-1)       Hobart 176 (+4)       Darwin 388 (-7)       Canberra 858 (+2)       National 22,211 (-317)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $775 (-$5)       Melbourne $570 ($0)       Brisbane $600 ($0)       Adelaide $580 (+$10)       Perth $625 (-$5)       Hobart $550 ($0)       Darwin $690 (-$10)       Canberra $680 ($0)       National $642 (-$2)                UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $730 ($0)       Melbourne $550 ($0)       Brisbane $625 ($0)       Adelaide $460 (+$10)       Perth $580 (+$5)       Hobart $460 (+$10)       Darwin $550 ($0)       Canberra $560 (-$5)       National $576 (+$2)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 5,654 (+231)       Melbourne 5,764 (+128)       Brisbane 4,271 (-9)       Adelaide 1,259 (+101)       Perth 1,944 (+50)       Hobart 337 (-36)       Darwin 168 (+19)       Canberra 647 (+18)       National 20,044 (+502)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 9,121 (+505)       Melbourne 6,022 (+34)       Brisbane 2,066 (+18)       Adelaide 366 (+1)       Perth 600 (-5)       Hobart 138 (-17)       Darwin 306 (+12)       Canberra 736 (+20)       National 19,355 (+568)                HOUSE ANNUAL GROSS YIELDS AND TREND         Sydney 2.55% (↓)       Melbourne 3.05% (↓)       Brisbane 3.53% (↓)     Adelaide 3.71% (↑)        Perth 4.28% (↓)     Hobart 3.90% (↑)        Darwin 5.58% (↓)       Canberra 3.64% (↓)       National 3.34% (↓)            UNIT ANNUAL GROSS YIELDS AND TREND         Sydney 5.26% (↓)     Melbourne 5.86% (↑)        Brisbane 6.56% (↓)     Adelaide 5.92% (↑)      Perth 7.44% (↑)      Hobart 4.80% (↑)      Darwin 8.42% (↑)        Canberra 6.06% (↓)     National 5.96% (↑)             HOUSE RENTAL VACANCY RATES AND TREND       Sydney 0.7% (↑)      Melbourne 0.8% (↑)      Brisbane 0.4% (↑)      Adelaide 0.4% (↑)      Perth 1.2% (↑)      Hobart 0.6% (↑)      Darwin 1.1% (↑)      Canberra 0.7% (↑)      National 0.7% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 0.9% (↑)      Melbourne 1.4% (↑)      Brisbane 0.7% (↑)      Adelaide 0.3% (↑)      Perth 0.4% (↑)      Hobart 1.5% (↑)      Darwin 0.8% (↑)      Canberra 1.3% (↑)      National 0.9% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND       Sydney 28.0 (↑)      Melbourne 29.2 (↑)        Brisbane 30.6 (↓)       Adelaide 23.8 (↓)     Perth 34.2 (↑)      Hobart 29.4 (↑)      Darwin 39.9 (↑)      Canberra 28.2 (↑)      National 30.4 (↑)             AVERAGE DAYS TO SELL UNITS AND TREND       Sydney 29.4 (↑)      Melbourne 29.6 (↑)        Brisbane 30.3 (↓)       Adelaide 22.5 (↓)       Perth 39.2 (↓)     Hobart 26.1 (↑)        Darwin 36.1 (↓)     Canberra 34.4 (↑)        National 31.0 (↓)           
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The Global Fight Against Inflation Has Turned a Corner

Falling inflation across industrialized countries opens the door for central banks to start cutting interest rates next year

By Tom Fairless and Paul Hannon
Thu, Nov 16, 2023 4:28pmGrey Clock 5 min

Inflation is falling faster than expected across advanced economies, marking a turning point in central banks’ two-year battle against surging prices.

Declines in consumer price growth, to below 5% in the U.K. last month and around 3% in the U.S. and eurozone, are fueling expectations that central banks could take their feet off the brakes and pivot to cutting interest rates next year.

That would provide welcome relief to a global economy that is struggling outside the U.S., increasing the prospects of a soft landing from a historic series of interest-rate increases without large increases in unemployment. Europe, in particular, is on the brink of recession.

Yields on government debt in Europe and the U.S. have slumped as investors start to price in earlier interest-rate cuts.

For months this year, economists puzzled over why growth and inflation hadn’t slowed more in response to interest-rate hikes. Now, there is growing evidence that higher borrowing costs are biting hard with a delay.

“It’s definitely a turning point for inflation,” said Stefan Gerlach, a former deputy governor of Ireland’s central bank. “Investors may be surprised at how rapidly central banks cut interest rates next year, maybe by one-and-a-half percentage point.”

The sharp declines in inflation across continents underscore how common factors drove up prices in the first place, especially the Covid-19 pandemic and Russia’s war in Ukraine. These crimped global supply chains, reduced the number of people in the workforce and fueled energy price increases, especially in Europe. As those forces subside, price pressures naturally ease.

Inflation was also given a boost by demand-side factors, such as trillions of dollars of government stimulus spending in the U.S., as well as pent-up demand and savings from consumers that accumulated during the pandemic. That, economists say, is why underlying inflation remains strong nearly four years after the start of the pandemic, and why rate increases were needed to bring it down.

Lower inflation “shows the effect of increasing rates by 4 or 5 percentage points,” Gerlach said. “Team Transitory were wrong,” he added, referring to a debate among economists over whether high inflation would subside by itself, a camp to which he belonged. “Our idea was that inflation would fall back without an increase in interest rates.”

Even countries where inflation has proved the most stubborn, such as the U.K., have started to show progress. Consumer prices rose 4.6% in October compared with the year-ago month, a drop from the 6.7% rate of inflation recorded in September and the slowest increase since October 2021, the statistics agency said Wednesday. Economists had expected to see a decline to 4.8%.

“The U.K. no longer looks like such a major outlier when it comes to inflation,” said Bruna Skarica, an economist at Morgan Stanley.

News of the U.K. decline followed Tuesday’s report of a larger than expected drop in U.S. inflation to 3.2% in October. The eurozone also reported a decline in inflation to 2.9% in October from 4.3% in September. Consumer prices were lower than a year earlier in Belgium and the Netherlands.

The cooling of consumer prices has persuaded some European policy makers that the battle to tame inflation has been won, and in a shorter period of time than in the 1970s, when a comparable surge in prices occurred.

“We’re in the process of exiting the inflationary crisis,” said France’s Bruno Le Maire before meeting with his fellow European Union finance ministers last week. “In a little under two years, Europe will have managed to control inflation, which weighs on our citizens, which weighs on households, especially the less wealthy.”

Investors are also more optimistic. They are pricing in interest-rate cuts by the Federal Reserve and European Central Bank starting next spring, and by the Bank of England next summer, according to data from Refinitiv.

Markets had priced a 30% probability of another rate increase by the Fed, from its current level of 5.25% to 5.5%, until publication of U.S. inflation data on Tuesday. That probability has now fallen to 5%, according to Deutsche Bank analysts. The prospect of a Fed rate cut by May soared from 23% on Monday to 86% by Tuesday‘s close.

Central bankers are more cautious after being surprised last year by the persistence of inflation. The Bank of England last month said it is too soon to think about cutting interest rates, having forecast that inflation would reach its 2% target in late 2025. Central bankers also point to the still-rapid rise in wages and the risk of higher energy prices if the conflict between Israel and Hamas spreads to other parts of the Middle East.

Morgan Stanley’s economists expect to see the Bank of England start to cut rates beginning next May, followed by the Federal Reserve and the European Central Bank in June. Regardless of the exact timing, there is a growing consensus that inflation is on the wane and lower interest rates will follow.

“We expect widespread declines in inflation and interest rates in 2024 across advanced economies,” Michael Saunders, a former BOE rate setter, wrote in a note to clients of Oxford Economics.

If so, it would raise the question of whether central banks overdid it with rate increases, especially in Europe.

Economists say those hikes are working their way through the economy, weighing on lending and spending. Job creation is slowing and unemployment is edging higher on both sides of the Atlantic, curbing wage growth. Households are becoming more reluctant to spend, as higher interest rates make it more advantageous to save, economists say. That weighs on growth prospects over the coming months.

U.S. retail sales fell 0.1% in October from a month earlier, the Commerce Department said Wednesday. That is the first decline since March and comes after a 0.9% increase in September. In the eurozone, industrial output declined by 1.1% in September from the previous month, official data showed on Wednesday.

The decline in inflation will be welcome news for political leaders, even if it has yet to boost their popularity.

While global factors contributed to the worst of the inflation surge and most of the recent decline, domestic economic conditions are likely to matter most as central banks enter the final stage—the so-called “last mile”—of getting inflation down to their targets of around 2%.

In the U.S., inflation is ebbing, as the labor market and consumer spending cool but remain solid. This has bolstered forecasts that price pressures will keep easing without a recession.

In Europe, the economic backdrop is more challenging. The continent faces headwinds to growth, from slowing global trade and sluggish growth in China, a critical export market, to efforts by governments to slow spending. Germany’s constitutional court on Wednesday ruled against a move by Chancellor Olaf Scholz‘s government to repurpose €60 billion in unused pandemic funds to finance green energy initiatives, creating a large hole in the state budget.

European households have also been more reluctant than their U.S. counterparts to spend pandemic-era savings. All that could lead to a deeper downturn and sharper drop in inflation in Europe, prompting earlier rate cuts by the ECB.

Despite the likelihood of lower interest rates ahead, a return to the period of ultra low interest rates that preceded the pandemic is deemed unlikely by many economists and investors, reflecting rising geopolitical tensions and demographic pressures.

Workforces are likely to shrink across major economies, including China, over the coming years as millions of baby boomers retire, driving up wages. And friction between China and the West will likely raise manufacturing costs as companies shift factories to other countries.



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The Embarrassment of Having to Explain Your ‘Monster’ Diamond Ring

Couples find that lab-grown diamonds make it cheaper to get engaged or upgrade to a bigger ring. But there are rocky moments.

By ALINA DIZIK
Mon, Dec 11, 2023 4 min

Wedding planner Sterling Boulet has some advice for brides-to-be regarding lab-grown diamonds, which cost a fraction of the natural ones.

“If you’re trying to get your man to propose, they’ll propose faster if you offer this as an option,” says Boulet, of Raleigh, N.C. Recently, she adds, a friend’s fiancé “thanked me the next three times I saw him” for telling him about the cheaper lab-made option.

Man-made diamonds are catching on, despite some lingering stigma. This year was the first time that sales of lab-made and natural mined loose diamonds, primarily used as center stones in engagement rings, were split evenly, according to data from Tenoris, a jewellery and diamond trend-analytics company.

The rise of lab-made stones, however, is bringing up quirks alongside the perks. Now that blingier engagement rings—above two or three carats—are more affordable, more people are dealing with the peculiarities of wearing rather large rocks.

An engagement ring made with a lab-grown diamond at Ada Diamonds in New York City. PHOTO: CAM POLLACK/THE WALL STREET JOURNAL

Esther Hare, a 5-foot-11-inch former triathlete, sought out a 4.5-carat lab-made oval-shaped diamond to fit her larger hands as a part of her vow renewal in Hawaii last year. It was a far cry from the half-carat ring her husband proposed with more than 25 years ago and the 1.5-carat upgrade they purchased 10 years ago. Hare, 50, who lives in San Jose, Calif., and works in high tech, chose a $40,000 lab-made diamond because “it’s nuts” to have to spend $100,000 on a natural stone. “It had to be big—that was my vision,” she says.

But the size of the ring has made it less practical at times. She doesn’t wear it for athletic training and swaps in her wedding band instead. And she is careful to leave it at home when traveling. “A lot of times I won’t take it on vacation because it’s just a monster,” she says.

The average retail price for a one-carat lab-made loose diamond decreased to $1,426 this year from $3,039 in 2020, according to the Tenoris data. Similar-sized loose natural diamonds cost $5,426 this year, compared with $4,943 in 2020.

Lab-made diamonds have essentially the same chemical makeup as natural ones, and look the same, unless viewed through sophisticated equipment that gauges the characteristics of emitted light.

At Ritani, an online jewellery retailer, lab-made diamond sales make up about 70% of the diamonds sold, up from roughly 30% two years ago, says Juliet Gomes, head of customer service at the company, based in White Plains, N.Y.

Ritani sometimes records videos of the lab-diamonds pinging when exposed to a “diamond tester,” a tool that judges authenticity, to show customers that the man-made rocks behave the same as natural ones. We definitely have some deep conversations with them,” Gomes says.

Not all gem dealers are rolling with these stones.

Philadelphia jeweller Steven Singer only stocks the natural stuff in his store and is planning a February campaign to give about 1,000 one-carat lab-made diamonds away free to prove they are “worthless.” Anyone can sign up online and get one in the mail; even shipping is free. “I’m not selling Frankensteins that were built in a lab,” Singer says.

Some brides are turned off by the larger bling now allowed by the lower prices.When her now-husband proposed with a two-carat lab-grown engagement ring, Tiffany Buchert, 40, was excited about the prospect of marriage—but not about the size of the diamond, which she says struck her as “costume jewellery-ish.”

“I said yes in the moment, of course, I didn’t want it to be weird,” says the physician assistant from West Chester, Pa.

But within weeks, she says, she fessed up, telling her fiancé: “I think I hate this ring.”

The couple returned it and then bought a one-carat natural diamond for more than double the price.

Couples find that lab-grown diamonds have made it more affordable to get engaged. PHOTO: CAM POLLACK/THE WALL STREET JOURNAL

When Boulet, the wedding planner in Raleigh, got engaged herself, she was over the moon when her fiancé proposed with a 2.3 carat lab-made diamond ring. “It’s very shiny, we were almost worried it was too shiny and was going to look fake,” she says.

It doesn’t, which presents another issue—looking like someone who really shelled out for jewellery. Boulet will occasionally volunteer that her diamond ring came from a lab.

“I don’t want people to think I’m putting on airs, or trying to be flashier than I am,” she says.

For Daniel Teoh, a 36-year-old software engineer outside of Detroit, buying a cheaper lab-made diamond for his fiancée meant extra room in his $30,000 ring budget.

Instead of a bigger ring, he got her something they could both enjoy. During a walk while on an annual ski trip to South Lake Tahoe, Calif., Teoh popped the question and handed his now-wife a handmade wooden box that included a 2.5-carat lab-made diamond ring—and a car key.

She put on the ring, celebrated with both of their sisters and a friend, who was the unofficial photographer of the happy event, and then they drove back to the house. There, she saw a 1965 Mustang GT coupe in Wimbledon white with red stripes and a bow on top.

Looking back, Teoh says, it was still the diamond that made the big first impression.

“It wasn’t until like 15 minutes later she was like ‘so, what’s with this key?’” he adds.

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