Australian dollar free falls, bonds boom, ASX pretends it’s all OK

See the latest Australian dollar analysis here:

Macro Afternoon

The Australian dollar poked its nose into the 0.65s for the first time since the GFC a little while ago:

Gottiboff has a crack at why:

But the world looks deeper at Australia, and the fall in our currency is not just a fall driven by the prospect of lower interest rates and a fear of a downturn in China as a result of the coronavirus.

Australian companies, particularly miners, detect a rising anti-Australian sentiment in European investment houses, driven by the environmental concerns that were raised during the bushfires. At times that leads to irrational demands like asking BHP to leave the Minerals Council because of that body’s perceived pro-coal views.

…Instead of pulling out all stops to address the real issues, too many in Canberra look to the Reserve Bank to again lower interest rates. In the general community, it is widely understood that lower interest rates no longer boost overall business activity and will probably lift unemployment further. The prospect of lower rates hits the dollar and boosts many asset prices but does nothing to address the issues.

Right on the cause. The world is looking at Australia and seeing a massive over-exposure to everything that COVID-19 threatens to destroy with a pack of complete idiots in charge.

As for lower rates and the AUD, they are the answer as both render structural change upon a consumer that has an enormous deleveraging task ahead, and an economy that has gleefully hollowed out its tradable sectors.

Bonds are cock-a-whoop:

While the most expensive stock market in the world buries its head in the sand:

Aided by the short term bounce in iron ore:

When in truth, COVID-19 will spell the accelerated end of Chinese globalisation – economically, geo-politically and possibly even politically – with all of the implications for Australia that that will entail.

David Llewellyn-Smith
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Comments

  1. SnappedUpSavvyMEMBER

    we’re in a recession right now for sure

    And the world doesn’t look deeper at Australia FFS what a dckhead, Australia wears its stupid as a badge of honour

  2. Just refi’d from BOQ to WBC, shaved 10 bps off (WBC initially offered 4 bps less, but magically negotiated down to 10bps with head office), 3k refi bonus.

    3.10, with redraw etc.

    And that’s without even trying. Banks want business, eh.

    NAB offering 4k refi bonus and 2k new business and 3.09. Ostensibly not together but if you push they’ll honour both “special offers”

  3. We work with clients in pretty much every sector of the economy which puts us in a unique position to get a very broad view of health. It’s not good.
    Also when the aud is this low we do tend to get more interest from overseas clients. Thats not happening this time around.