Aussie bond market on another planet

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The Australian bond market has departed Planet Earth and is now trading somewhere in the outer Oort Cloud. It is quite clear that Australia does not have the same inflation problem hitting other developed economies. It is equally clear that the RBA knows it. The only one out of the loop is the bond market.

Following today’s weak wage data, which printed 0.66% on the QTR and 2.3% on the year, the RBA has zero incentive to hike rates. This undershot its own low target of 2.5% by the end of 2021.

Q1,21 is the Morricession. If anything, it is going to deliver even weaker quarterly growth. That will get us to the end of May with wage growth in the low 2% range.

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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.