We were the first to publicly canvass the near-term possibility of Aussie QE (actually, it was one our investors who encouraged us to dig into this), and an increasingly intense debate on the subject has since been unleashed with CBA publishing no less than 3 reports on QE within about... Show More
This week the Aussie weakened a little against most major currencies but has held up against the US dollar. This is a decent performance given that it had to absorb the RBA’s first rate cut since 2016 and Australia’s very poor GDP data. On Tuesday the RBA cut its cash... Show More
Today I explain why ANZ was nuts not to fully cut its lending rates in May; why it will be even harder for all banks to pass along the next RBA cut, which could come in July or August; why the cash-flow impact of rate cuts could actually be negative;... Show More
As expected the Reserve Bank of Australia (RBA) cut interest rates by 25 basis points on Tuesday, taking the cash rate to 1.25%. We take a look at the economic indicators in conjunction with Governor Lowe’s comments to help determine what the most likely action is for the RBA. Given... Show More
We recently moved to reduce the amount of risk in our model portfolios. This followed the escalation in US-China trade tensions after President Trump increased the tariff rate on $200 billion worth of Chinese imports. We moved to an underweight position in US equities and closed out our overweight position... Show More
Considering the blows the Aussie dollar has suffered this week, it has been quite resilient, roughly unchanged over the week against the US dollar, around 69 cents. The Aussie did start the week on a positive note, jumping on Monday’s open as the Coalition government defied opinion polls to retain... Show More
In my column today I reveal that there are some tentative signs that the Aussie housing market may be already turning with a recovery assured by: an RBA rate cut in June; APRA's decision to slash the minimum interest serviceability rate from circa 7.25% to 6.0%, which we estimate will... Show More
The Reserve Bank of Australia opted to leave interest rates on hold. But with key parts of the economy in decline, it may be just a matter of time before it has to cut again. The question is: how effective will a rate cut be? It’s generally folly to predict whether... Show More
This week I argue that while RBA governor Phil Lowe passed with flying colours the controversial intelligence test we pitched him last week (by not cutting the cash rate in May), he is nonetheless likely to cut over the next few months. And although he is exhausting his conventional monetary... Show More
It was a successful week for Westpac’s economics teams in Sydney and Auckland as they correctly predicted both the RBA’s steady hand and the RBNZ’s interest rate cut despite sharply divided market pricing and economists’ forecasts. But the fragility of the Australian dollar’s rise against the kiwi after the RBNZ... Show More