JPMorgan’s Sally Auld did a terrific job of flushing the Great Southern Dunny yesterday:
Introduction
One of our key research themes for 2017-2018 has been the persistent desynchronization of the Australian economy from global growth dynamics. We first addressed this issue in a research piece last year (see Managing reflation expectations in Australia, S. Auld and B. Jarman, 11 April 2017) and earlier this month published a note looking at the extent to which the Australian economy has “lost responsiveness” to global growth (on the upside) – see Australian and global GDP still running different races, T. Kennedy, 1 February 2018.
Despite having to endure occasional bouts of market and client enthusiasm for RBA rate hikes over 2017, our view of a desynchronized Australia turned out to be the right way to think about Australian economic growth and RBA policy over the past year. In this research note, we take the opportunity to refresh our thoughts on this issue, and to re-assess, what, if any, opportunities remain to trade the desynchronization theme in rates and FX markets.
