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Market Insights

• Australian Household Spending Proves More Resilient Than Expected
• Falling Oil Prices Ease Inflation Concerns
• America’s Manufacturing Revival Is Yet to Reach the Trade Data
• Diversify Your Portfolio with a New INEOS-Linked Credit Note

Key Points

• Australia: The RBA left the cash rate unchanged at 4.35% p.a. at its June meeting. June CPI eased to 3.8% p.a., while Trimmed Mean was unchanged at 3.60% p.a.
• United States: The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% p.a. at its July 2026 meeting. The latest U.S. CPI inflation rate is at 3.5% p.a. in June 2026. Core CPI moderated further to 2.6% p.a.
• United Kingdom: The Bank of England held the Bank Rate steady at 3.75% p.a., and headline CPI for June was 2.6% p.a., down from 2.8% in May. Core inflation was unchanged at 2.6% p.a.
• Eurozone: The European Central Bank left its key deposit facility rate unchanged at 2.25% p.a., and Euro area CPI was 2.9% p.a. in July.

Here are the latest monetary-policy and inflation figures for key economies:

Australian Household Spending Proves More Resilient Than Expected

The ABS Household Spending Indicator surprised to the upside in June, with spending rising 0.8% over the month and quarterly growth accelerating to 5.2% annualised from 4.1% in Q1. Real household spending also remained solid, while the implied household spending deflator was a relatively modest 2.4% annualised, consistent with easing inflation pressures. While the strength of the data appears at odds with the broader narrative of a slowing economy, the ABS measure has been more volatile than CBA’s Household Spending Insights, with the official National Accounts on 2 September expected to provide a clearer picture of underlying consumption trends.

Why it matters: Resilient household spending supports economic activity and suggests consumers are continuing to absorb higher borrowing and living costs. However, continued strength in demand may also slow the return of inflation to target, reinforcing the RBA’s preference to remain patient and assess incoming economic data.

Falling Oil Prices Ease Inflation Concerns

Oil prices moved lower over the past week as geopolitical risk premiums continued to unwind. Comments from President Trump and Iranian officials raised expectations that the Strait of Hormuz could reopen, easing concerns over a prolonged disruption to global oil supplies. While tensions in the Middle East remain elevated, markets appear to be assigning a lower probability to a significant supply shock.

Why it matters: The decline in oil prices is significant beyond the energy sector. Lower oil prices reduce upward inflation pressure, ease input costs for businesses and provide some relief for consumers, reinforcing expectations that major central banks, including the RBA, can remain patient on interest rates. With supply fears continuing to fade, attention is likely to shift back towards underlying economic fundamentals and the outlook for global growth.

America’s Manufacturing Revival Is Yet to Reach the Trade Data

The U.S. trade deficit narrowed 5.6% in June to US$73.3 billion as imports declined 1.8%, while exports eased 0.9%. The improvement follows a volatile first half of the year, with the deficit widening from US$79.0 billion in January to more than US$105.0 billion in May before retreating in June. Trade flows have been distorted by tariff policies, geopolitical tensions and shifting supply chains, making the monthly data more volatile than usual. Despite the narrower deficit, recent GDP and consumer spending data continue to point to a resilient U.S. economy. While investment in domestic manufacturing continues to accelerate, imports remain elevated as businesses purchase the machinery, technology and equipment needed to expand capacity. As a result, the benefits of America’s manufacturing revival are yet to be fully reflected in the trade balance and are likely to emerge only over time.

Why it matters: A narrower trade deficit can support headline economic growth, but one month of data does not establish a sustained improvement. Continued investment in productive capacity is broadly supportive of long-term corporate growth, although the effects of America’s manufacturing investment are likely to emerge gradually.

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