NAB Morning Call Inflation or demand destruction?
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Mar 29, 2026 Skye Masters, market economist at NAB who analyses macro trends and markets, discusses oil’s jump amid Middle East tensions and whether that fuels inflation or chokes demand. She covers shifting bond yields, the Michigan survey’s hit to consumer sentiment, VIX-driven currency moves, and the key week of payrolls and CPI data shaping central bank reactions.
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Escalation Is Pushing Markets Toward Demand Risks
- Geopolitical escalation is shifting investor focus from immediate inflation to potential demand destruction.
- Skye Masters notes sentiment fell and one-year inflation expectations rose while medium-term expectations stayed anchored at 3.2%, hinting at growth concerns.
Surveys Caught The Shock Timing Effect
- Consumer surveys show an immediate sentiment hit as data collection crossed the conflict's start date.
- The University of Michigan saw sentiment drop and one-year inflation expectations rise to 3.8%, while medium-term stayed at 3.2%.
Houthis Raise The Risk To Oil Supply Routes
- The war's widening risk (Houthis, Red Sea) could further disrupt oil flows and shipping, raising upside risks to oil above current levels.
- Commentators warn attacks on Red Sea routes or pipelines could push oil toward $150 a barrel.