Greenlight Mortgages

AUSTRALIAN ECONOMICS & MARKETS DIGEST

admin — Wed, 30 Jul 2014 02:58:01 +0000

AUSTRALIAN ECONOMY: inflation data last week did little to alter our monetary policy outlook although supported our conviction that further rate cuts are unlikely. ‘Underlying’ inflation appears to have been near the middle of the RBA’s 2-3% target band in six-month-ended annualised terms. There was little in the detail to alter our ‘middle of the road’ inflation forecasts, which are underpinned by low wage growth keeping a lid on non-tradables inflation and offsetting pass-through to tradables inflation from the currency. The RBA Governor noted earlier last week that he is “content right now” with the cash rate setting and he highlighted the limitations of monetary policy in providing support to growth. Encouragingly, the ANZ-Roy Morgan consumer confidence index rose further last week and has now retraced the sharp deterioration seen in the weeks around the Commonwealth Budget. This suggests the ‘sticker shock’ from the Budget was temporary. Confidence is now back around long-run average levels but remains below levels seen towards the end of last year. CURRENCIES: our core views haven’t changed around the Australian dollar (AUD) outlook in that we expect it to move lower to around USD0.84 at some stage. Gauging the timing of this move remains largely dependent on US factors. The USD is certainly showing more strength against other currencies, such as the NZ dollar and euro, suggesting that the AUD’s ability to stay strong under the influence of low US interest rates may also be on borrowed time. In fact, the Federal Reserve seems to be getting closer to its first rate hike – at least that is our assessment of the trend in the US economic data. The AUD at around USD0.94 currently remains attractive for importers and we remind that the adjustment back towards less heightened levels could be abrupt. INTEREST RATES: we have lowered our fixed rate forecasts for the end of the year by about 40bps in response to our view that the RBA will initially increase the cash rate a few months later than we previously thought. We still expect interest rates to rise over the course of the year, however, and our view that the US Federal Reserve will now commence raising its policy rate in March could put upward pressure on Australian rates given the strong relationship between the US and Australian interest-rate markets. A flatter yield curve than we were previously forecasting also suggests that borrowers may find value in fixing for longer time periods

admin — Wed, 30 Jul 2014 02:57:11 +0000

AUSTRALIAN ECONOMICS & MARKETS DIGEST 29 JULY 2014 WHAT WE ARE WATCHING • In Australia, it’s a quiet week with just building approvals, RBA credit and house price figures due. Next week we get labour force and the RBA’s quarterly forecast update. • Overseas, it’s a busy week. In the United States we have the Federal Reserve policy meeting, Q2 GDP figures, the ISM manufacturing survey and payrolls employment and unemployment rate figures on Friday. China’s ‘official’ manufacturing PMI is also released. Inflation figures for the euro area will also be watched closely. KEY DEVELOPMENTS AND VIEWS FROM ANZ RESEARCH GLOBAL ECONOMY: our team now expects the US Federal Reserve to kick off its rates normalisation in March 2015 rather than June 2015 as forecast previously. This is largely based on the view that the Fed is approaching its dual mandate on inflation and full employment faster than we, and they, have been anticipating. We maintain our view, however, that the process of policy normalisation will be gradual. In China, the July HSBC manufacturing PMI survey beat expectations last week, supported in our view by mini-stimulus measures introduced by China’s authorities. AUSTRALIAN ECONOMY: inflation data last week did little to alter our monetary policy outlook although supported our conviction that further rate cuts are unlikely. ‘Underlying’ inflation appears to have been near the middle of the RBA’s 2-3% target band in six-month-ended annualised terms. There was little in the detail to alter our ‘middle of the road’ inflation forecasts, which are underpinned by low wage growth keeping a lid on non-tradables inflation and offsetting pass-through to tradables inflation from the currency. The RBA Governor noted earlier last week that he is “content right now” with the cash rate setting and he highlighted the limitations of monetary policy in providing support to growth. Encouragingly, the ANZ-Roy Morgan consumer confidence index rose further last week and has now retraced the sharp deterioration seen in the weeks around the Commonwealth Budget. This suggests the ‘sticker shock’ from the Budget was temporary. Confidence is now back around long-run average levels but remains below levels seen towards the end of last year. CURRENCIES: our core views haven’t changed around the Australian dollar (AUD) outlook in that we expect it to move lower to around USD0.84 at some stage. Gauging the timing of this move remains largely dependent on US factors. The USD is certainly showing more strength against other currencies, such as the NZ dollar and euro, suggesting that the AUD’s ability to stay strong under the influence of low US interest rates may also be on borrowed time. In fact, the Federal Reserve seems to be getting closer to its first rate hike – at least that is our assessment of the trend in the US economic data. The AUD at around USD0.94 currently remains attractive for importers and we remind that the adjustment back towards less heightened levels could be abrupt. INTEREST RATES: we have lowered our fixed rate forecasts for the end of the year by about 40bps in response to our view that the RBA will initially increase the cash rate a few months later than we previously thought. We still expect interest rates to rise over the course of the year, however, and our view that the US Federal Reserve will now commence raising its policy rate in March could put upward pressure on Australian rates given the strong relationship between the US and Australian interest-rate markets. A flatter yield curve than we were previously forecasting also suggests that borrowers may find value in fixing for longer time periods

admin — Wed, 30 Jul 2014 02:51:13 +0000

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admin — Fri, 24 May 2013 12:53:35 +0000

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