Easing This Week???

NAB and ANZ have recently released 1/2 year results. One key statistic to come out is that small to medium-sized enterprises are struggling. Loan defaults are occuring at a greater rate and sooner than either bank expected. The faultering of this sector will impair the economy's ability to bounce back from recession quickly. The effect of this will be that rates are kept lower for longer.

Job ads have halved in a year: According to the Oliver Job index online job ads have fallen 7.43% in April or just shy of 50% in a year.

The RBA Board meets this week. While I'm of the view that if they are going to ease later they might as well get it done now before things get worse, I don't think they will. The market concensus is certainly moving that way with only a 26% chance of a 25 point cut priced in. The justification for the brief pause is to A/ Confidence - give the impression things aren't as bad as they seem. People generally wait until the easing process has finished before getting active again, B/ Let current stimulus work its way through the system, and C/ see what the budget holds.