Via Fitch: Fitch Ratings has affirmed Australia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘AAA’ with a Negative Outlook. KEY RATING DRIVERS Australia’s rating reflects its strong institutions and effective policy framework, which supported nearly three decades of economic growth prior to the coronavirus pandemic and helped limit the severity of the current shock. The
Mizuho: ◼ Usually, it takes two to three weeks for China’s industrial production to recover to full capacity post a lunar new year (LNY) holiday as rural migrant workers return to the city. However, such a recovery is expected to arrive earlier this year as many workers spent the holiday in the city due to
Iron ore prices were firm overnight as paper rebounded with steel and dirt yesterday: The latest update for steel output levels in China via CISA are insane at 2.15mt per day: I expect output to fall as the year wears on, much like 2011, as China steadily applies the stimulus brakes. In a supply-constrained environment,
Crikey wraps it nicely: Former Liberal staffer Chelsey Potter has written an op-ed at InDailyaccusing federal Finance Minister Simon Birmingham of not meeting with her either before or after she went public with allegations of sexual assault by a colleague. InDailyfurther explains that Birmingham, who was not told of the allegations while Potter worked in his office, has confirmed he declined to
Readers will know that we have been expecting a scary steepening of the bond curve. The reasons are clear. The global vaccine recovery has begun. Central banks have nailed short-end yields to the floor. Fiscal stimulus is booming. There are short-term inflation pressures in the global inventory rebuild and production bottlenecks. Energy prices are surging.
Bill Evans at Westpac: The housing market upturn that emerged in the third quarter last year has strengthened and broadened materially through year-end with all aspects now showing strong gains. Turnover is up 25% over the year, prices nationally are pushing above their pre-COVID levels, dwelling approvals surged 22% in the final quarter of 2020,
I have noted many times over the past year why the OECD would be bonkers to promote former Australian Finance Minister, Matthias Corman, to secretary-general. The two reasons are straightforward. Cormann’s record of voting on climate change is abysmal and he played a key role in destroying Australia’s world-leading carbon price. Second, economically, Cormann is
For those who are sceptical that China is on the verge of delivering a threat to the USD with the world’s new reserve currency, today marks another cynical day. There is new excitement at Bloomberg for CNY as its daily turnover rises: The article notes that the driver is the carry trade into higher Chinese
Via Banking Day: Australian Banking Association chief Anna Bligh has given a commitment that her organisation’s members will continue to provide support to customers affected by the pandemic when the current loan deferral arrangements end next month. The ABA said banks were working directly with customers in hardship to work out an appropriate outcome. Bligh
The latest distraction thrown up by the struggling Morrison Government is a push for nuclear power. The Nats began it last week. Today we see more Coalition flunkies joining the push. The AFR has trolled the internet to find somebody else that supports the notion in Poland. At The Australian it’s Menzies Insitute doyen Nick
There is a country without official recognition to whom it is time we gave diplomatic credentials. Antiameristan has a small population in Ultimo, Sydney. But its views and identity are strongly formed enough to merit full sovereignty. The nation of Antiameristan takes its name from its lifetime dictator, Stan Grant, who appeared at the ABC
Readers will know that we have a very bullish outlook for the economic recovery this year. Indeed, we see the US at Chinese-style growth rates for the next year before coming off. The reasons for this are: An ongoing global inventory cycle in goods production that has American wholesalers and retailers short of stock. A
JPM: The virus crisis, by boosting money supply as well as demand for an “alternative” currency, has supported both gold and bitcoin over the past year. The older cohort preferred gold, while the younger cohorts preferred Bitcoin as an “alternative” currency. Both gold and bitcoin investment vehicles have experienced strong inflows over the past year,
Iron ore prices fell on February 19th, 2021 as paper markets pulled back. Steel has not updated: The dynamic we see every year at this time is the building of the great steel pile. That is well underway: It will run for another three weeks yet so I expect to see it top out somewhere
A new Newspoll is out taken from last Monday through Wednesday. It shows that Labor is trending higher in its primary vote: Two-party preferred remains a dead heat: Extraordinarily, voters appear to blame Albo for the rape controversy as ScoMo jumped to a record-high approval rating and Albo dumped: Labor is clearly strengthening in trend
There were reasons to be cautious on the global vaccine rollout. It was spectacularly swift and many drug companies have been indemnified in the event of fallout. However, the rollout is going swimmingly in those countries that have been most aggressive with excellent results in overall leader Israel as the Pfizer vaccine works to both
More horrific revelations about rape in our parliament over the weekend. A second and third woman has come forward to level rape allegations by the same Liberal staffer. The PM’s office has sunk into a swamp of lies as senior officials are exposed as knowing about Brittany Higgins early on. Higgins herself has triggered a
Friday night saw the Australian dollar roar higher virtually by itself. It was aided by a weak US dollar but that doesn’t fully explain it. Risk was generally muted and other currencies did not move anywhere so aggressively. Why? Wall Street bulls are still talking up the AUD despite rising US inflation and yields. Via
In a crazy world, the rational is irrational and the irrational rational. That is how I would describe the state of play in the gold versus Bitcoin debate with the latest installment coming from Doubleline doyen Jeffrey Gundlach: I am a long term dollar bear and gold bull but have been neutral on both for
The bond back-up continued in the US overnight and caused some dyspepsia for stocks. JPM has more on where this leads: As bond yields have moved up, there has been a general focus on whether this will 1) become a problem for the broader market, due to elevated multiples and 2) whether it will continue
As noted yesterday, the Australian dollar is suddenly caught between the thermal of reflation and commodity prices versus the wind shear of rising US bond yields and inflation. Last night saw more of the same as risk markets were hit but key commodity prices, especially iron ore, rose. MUFG has more on inflation and yields:
As expected, and as usually happens, following Chinese New Year, steel mills returned refreshed and ready to buy. That said, it’s not always quite so tearaway with everything going bonkers the moment markets reopened. We spent most of the day at or near limit up: I expect firm prices through iron ore markets through the
Markit reports that the Australian flash PMI has slowed: Flash Australia Composite Output Index Feb: 54.4, 4-month low (Jan final: 55.9) Flash Australia Services Business Activity Index Feb: 54.1, 4-month low (Jan final: 55.6) Flash Australia Manufacturing Output Index Feb: 55.9, 2-month low (Jan final: 57.3) Flash Australia Manufacturing PMI Feb: 56.6, 2-month low (Jan
Ever since the bushfire crisis last year when Scott Morrison disappeared to Hawaii, it has been clear that there is something amiss with our prime minister. Upon his return, he traveled to affected areas and was accosted by angry and traumatised victims. His response was to embarrass himself and shock victims by forcing them to
It’s responsible for much that is bad in the contemporary political economy. Its algos feed biases. Its lack of editorial standards feeds conspiracy theorists. It divides more than it brings together. And today it has taken on the mantle of a coercive foreign power. Witness the marvel that is Facebook: Social media giant Facebook will
The trade de jour is the steepening yield curve and rising inflation. I have noted many times that the inflation narrative is much more cyclical than it appears owing to early cycle constraints that will fade relatively quickly into 2022. The other driver, so say the narrative, is MMT and runaway US fiscal support. Goldman
Several things are working in favour of rising bank valuations favour now. The first is the steepening yield curve which always drives a bid for financials given it represents greater interest income for a borrow short, lend long business. The second is highlighted at Banking Day: Westpac booked an impairment benefit of A$501 million in
Beijing continues to deliver the Australian national interest ahead of the Australian Government. Following its shutting down of capital flows into Australian property. Following the projection of a virus that has shut down immigration. Following its triggering of an income boom via a trade war on itself, and pushing Australian exporters to diversify. Following a
Via the FOMC: Despite a sharp spike in unemployment since March 2020, aggregate wage growth has accelerated. This acceleration has been almost entirely attributable to job losses among low-wage workers. Wage growth for those who remain employed has been flat. This pattern is not unique to COVID-19 but is more profound now than in previous
I noted earlier that the US inflation panic is likely to drive yields higher yet. For how high we turn first to BMO: The selloff in Treasuries appears to have stabilized overnight after 10-year yields reached as high as 1.331% and 30s touched 2.11%. These extremes were accompanied by an elevated volume profile with cash
