Australian interest rates

According to Bloomie, hedge funds are long the Australian dollar: Leveraged funds hold a net long position of 20,509 contracts in the currency.

Goodbye TFF, goodbye rock bottom mortgages.

Us yields may be falling owing to the peak in its inflation burst and coming disinflationary bust, but they can;t down to Aussie yields which are falling even faster.

With this note from Deutsche: Ronald Reagan (1978): “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” Joe Biden (2021): “A job is about a lot more than a paycheck.

The NAB business survey used to be a quite useful forecaster of GDP and its segments.

Bill Evans at Westpac with the note: The RBA Board is likely to decide that there will be no extension of the YCT to the November 2024 bond at the July Board meeting because such action would imply no tightening till 2025.

Goldman has a note today that will scare the willies out of Australians: Central banks and especially financial markets believe that the neutral real short-term interest rate (r*) is extremely low.

Chris Joye with the note: The RBA has provided clear signalling that in July it will move to a new form of open-ended quantitative easing (QE) at the current run-rate of $5 billion of bond purchases each week, which will be periodically reviewed.

Bill Evans at Westpac with the note: As expected the Reserve Bank Board kept its policy settings unchanged at the June Board meeting.

No more Mr Hawk at the Shadow RBA: Cash rate should stay on hold for at least another year – Shadow Board The lockdown in Victoria serves as a potent reminder that Covid-19 can affect the domestic economy unexpectedly at any time, at least until a large proportion of the Australian population is vaccinated.

Yesterday the NZD carried the Australian dollar higher after a hawkish RBNZ statement: Now that operational constraints have been addressed and the OCR can be lowered further if necessary, we believe it is appropriate to return to our long-standing practice of publishing an OCR projection (figure 2.17).

Nordea with the note: The “boundless” costs of the pandemic leave governments with no choice but to finance lockdowns with increasing public debts.

The RBA is nowhere near tightening monetary policy.

Chris Joye with the note.

A great note from Nataxis on US inflation.

If inflation is coming it is going to have to overcome one yawning gulf in the global output gap.

Listen to the Chinese bond market because it tells you what is coming for the world, especially Australia.

Or, at least, take the froth off the top.

Via the excellent George Tharenou: Budget: only $8bn budget improvement over 5 years; given $96bn stimulus The Australian Government Budget, relative to the MYEFO released in Dec-20, forecasts a far smaller than expected cumulative improvement over the 5 years to 24/25 of only $8bn.

At least the top two are not.

The RBA has made clear that it will not tighten monetary policy until such a time that inflation is sustainably within its 2-3% target.

There’s revolution brewing at the ABC.

In Australia, it just doesn’t do to tell the truth about our ruling classes.