Federal Treasury, Head of Global Strategy TD London, Advisor to a PM, punter. Speaker. MD Market Economics.
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My 2026 forecasts:
GDP H1 lifts to 2.5%; sub 2.0% in H2
Unemployment rate to 5%
Inflation eases 2.0 to 2.25%
Wages growth soggy at 3%
RBA cuts to 3.10%
10 yr bonds 4.00%
AUD lifts to 75 c
House prices – no change, downside risks
ASX200 – below 8,000
piped.video/watch?v=u6007K2J…
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Oh - it's not just Australia that these global oil prices are impacting.
Contrary to the muppetry that goes on here
The shock of oil prices at a five-month high of $110 a barrel and gas prices in Asia and Europe hitting their highest levels since December 2022 is making its mark on household budgets.
As well as raising the costs of transport and heating, it adds to pressure on food, clothing and packaging prices and contributes to elevated levels of inflation and borrowing costs reut.rs/4dQSeUW
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As a parallel aside to the RBA's view that a major tranmission mechanism of monetary policy is via the exhange rate, it is noteworthy that the 10 year bond yield in France is 5.00% vs 3.43% in Germany (just for an example) yet both have the same currency
ICYMI
What drives currencies? The RBA goes hard on interest rates and monetary policy.
RBA Deputy Governor Andrew Hauser went hard saying that the cash flow impact of debtors (mortgage holders) was the least important transmission mechanism in the link between monetary policy & inflation.
Instead, Dr Hauser said the impact on foreign exchange rates was the dominant factor bringing inflation back to target when monetary policy was adjusted.
Click on the link to see why this is a risky game to play.
piped.video/watch?v=7mI9MT-M…
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Victoria State election betting update:
More flows to the Coalition in last 24 hours.
Coalition $1.32
Labor $5.50
Other $9.20
Via @Betfair_Aus
Bet only what you can afford to lose
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The RBA is playing a dangerous game.
RBA Deputy Andrew Hauser downplayed the effect of rising unemployment & falling house prices when outlining the issues dominating RBA thinking as it prepares for the interest rate announcement on 3 Nov.
While Dr Hauser was at pains to say inflation was ‘materially worse’ than forecast in August, he gave short shrift to the ‘materially worse’ unemployment rate. He also glossed over falling house prices even though around $1 trillion of household wealth has been destroyed since March, something that presents material downside to household spending growth.
piped.video/watch?v=qqN2KSt4…
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Could it be that Australia's inflation issue is part of a global phenomenon? Obviously yes.
All other central banks don't have the hang-up of the RBA about much of it because it is a temporary supply side issue that monetary policy cannot fix.
UK inflation jumped to 3.5% in September (up from 3.1% in August), topping the consensus forecast and hitting its highest level this year.
The release reinforces the broader global theme: inflation re-accelerated in September, due mainly -- but not exclusively -- to higher energy prices.
#economy #markets #inflation #uk
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ICYMI
The RBA reckons that the biggest impact on inflation from monetary policy is via the exchange rate.
This might look good in a text book but in reality it's unhelpful to think this way & can lead to policy errors
What drives currencies? The RBA goes hard on interest rates and monetary policy.
RBA Deputy Governor Andrew Hauser went hard saying that the cash flow impact of debtors (mortgage holders) was the least important transmission mechanism in the link between monetary policy & inflation.
Instead, Dr Hauser said the impact on foreign exchange rates was the dominant factor bringing inflation back to target when monetary policy was adjusted.
Click on the link to see why this is a risky game to play.
piped.video/watch?v=7mI9MT-M…
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Big news - looks like immigration is falling sharpy, possibly/probably below the govt's target.
That will spark some debate if we find NOM is under 1%pa in the next few qtrs
We've banged on about this for 6 months, but the slowdown in Australia's NOM has quickened since the latest available official data for the March quarter.
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What drives currencies? The RBA goes hard on interest rates and monetary policy.
RBA Deputy Governor Andrew Hauser went hard saying that the cash flow impact of debtors (mortgage holders) was the least important transmission mechanism in the link between monetary policy & inflation.
Instead, Dr Hauser said the impact on foreign exchange rates was the dominant factor bringing inflation back to target when monetary policy was adjusted.
Click on the link to see why this is a risky game to play.
piped.video/watch?v=7mI9MT-M…
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Victoria State election betting:
Flows to the Coalition in the past week or so.
Coalition $1.37
Labor $5.10
Other $9.20
Via @Betfair_Aus
Note: Bet only what you can afford to lose.
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What a pathetic joke.
Laughable the RBA, which is one of the highest paying central banks in the world, is having a revolt over what is an over generous pay offer.
Zero evidence of any productivity gains at the RBA for years. Lucky to get 0%
RBA employees have rejected a proposed 9.5 per cent wage hike for the second time, putting pressure on the central bank to offer a more generous deal. ebx.sh/a8xEja
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Oil above US$110 (Brent)
I don't think the RBA rates hikes and the cash rate at a 15 year high have impacted much.
It's a dumb idea to tackle that source of inflation with rate hikes in Australia
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Stephen Koukoulas retweeted
If only Labor had someone half as good at nailing issues as Hastie...
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Stephen Koukoulas retweeted
With unemployment rising, house prices falling and consumer confidence plunging, the RBA's aggressive interest rate policies risk pushing the economy into recession.
RBA's extreme interest rates push economy towards potential recession
~ @TheKouk
independentaustralia.net/pol…
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