Bearish banks beat RBA lackeys on rates

First up is George Tharenou at UBS:

The Jan labour report was materially weaker: y/y jobs slowed to the worst since Apr-17, hours dropped 0.4% m/m, underutilisation spiked to the highest since Apr-18, & unemployment lifted 21bps (the largest m/m rise since Jan-16), to the equal highest since May-18 – all before the significant impact of COVID-19. Given Q1 GDP is likely negative, we still expect unemployment to lift further to 5½% in coming quarters. Given the (expected) lack of fiscal stimulus ahead, we reiterate our view the RBA will cut 25bps in April (albeit conditional on the rise in unemployment at least being maintained); and again to 0.25% in August (still conditional on global central bank easing).

Then Ben Udy at Capital Economics:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.