Morning from Europe.

Australian policymakers received benign news from the quarterly inflation report and everything but alcoholic beverages now disinflates on a QoQ basis.

We even have outright deflation in clothing and footwear and furnishings, while also the recreation category is falling off a cliff.

We have been betting on a “catch down” effect in Australia with a time-lag to G10 inflation developments, and it seems like it is finally starting to pay off. 1y1y AUD swap rates are down 16bps on the inflation release and our AUD duration bets celebrate.

Chart 1: Australian disinflation across categories