More like Joye wrong:
It says a tremendous amount about the mental agility of Martin Place, and its outstanding board, that they were able to swing 180 degrees to lead the world with a quarter-percentage point cut on Tuesday. It was one of Phil Lowe’s finest hours, accented by gushing praise in a tweet from America’s president. Lowe’s statement on Tuesday was measured and a striking contrast to Powell’s bumbling press conference, which nuked the immediate benefits of the Fed’s emergency half-percentage-point rate cut days later.
Whereas Lowe made it clear the RBA would support the air pocket in growth created by the virus, and guarantee the liquidity of the financial system by acting as a lender of last resort, Powell managed to crater his own equities market. Shares in the US had jumped more than 5 per cent in anticipation of Fed action. One hour after the Fed delivered on its Saturday signal, they remained in the black.
Who cares what equities did! They are the proverbial idiot cousin of markets. What matters is the price of credit and forex.
Lowe lifted both of his. Powell dropped both of his. Australia comprehensively lost the first round of easing.
The RBA got this wrong not the Fed. A point that will be firmly underlined over the next fortnight as the RBA is forced to consider (but will reject to spare itself embarrassment) a second emergency cut and rush to QE as the virus explodes worldwide and the Fed slashes another 50bps, leading to a crushed yield spread:
And upwards pressure on the AUD at the worst possible time.
