News on the post-disaster state of the Japanese economy has surface over the last couple of days, and has showed that economic activity has been crushed after the earthquake/tsunami. Industrial production has fallen 15.3% in March, retail sales were 7.8% lower and household spending dropped by 8.5%. The Japanese car industry has also been severely hit, as vehicle production for April is 57.3%yoy lower. The Bank of Japan have cut their growth forecasts to 0.6% for the year ahead, from 1.6%, however they didn’t expand their asset purchase program at yesterdays Board meeting.
The winter weather has affected the US growth for the March quarter, as it eased back to 1.8%yoy from 3.1%yoy, slightly below the forecast of 2%yoy.
Today will see RP Data-Rismark house prices and RBA credit for March.
April 29, 2011
CPI Data
The CPI data released yesterday came in higher than expected for the first quarter of 2011. The headline inflation rate rose by 1.6%, well above the market forecast of 1.2%. As expected, vegetables and fruit were significantly higher, rising by 16% and 14.5% respectively, following the effects of the floods and cyclone Yasi. Fuel was also higher, rising by 8.8%, while price rises were also seen in pharmaceuticals, electricity and education.
The underlying measures were 0.85% higher for Q1, higher than the 0.7% expected. This means that inflation is likely to fall out of the current RBA forecasts, meaning that the Board may face some policy concerns ahead. With the unemployment rate falling, and wage pressures rising, economists are starting to predict a hike sooner rather than later. If the AUD continues to appreciate, prices will remain in check, however a reversal in the AUD will most likely see significant pressure placed on the RBA.
In the US last night, the FOMC left their policy unchanged.
The underlying measures were 0.85% higher for Q1, higher than the 0.7% expected. This means that inflation is likely to fall out of the current RBA forecasts, meaning that the Board may face some policy concerns ahead. With the unemployment rate falling, and wage pressures rising, economists are starting to predict a hike sooner rather than later. If the AUD continues to appreciate, prices will remain in check, however a reversal in the AUD will most likely see significant pressure placed on the RBA.
In the US last night, the FOMC left their policy unchanged.
April 27, 2011
Quarterly CPI to be released
Today in Australia will see the March quarter CPI released. Vegetable and food prices have increased over the last couple of months, which means that we are likely to see an increase in headline CPI to 1.4%, increasing the annual pace to 3.2%, up from 2.7%. Oil prices have also contributed to this number as WTI May futures are currently sitting just above $112 a barrel. On the other hand, underlying measures are expected to rise modestly, with annual underlying CPI expected to ease back to 2.1%.
The US FOMC will meet tonight, and Bernanke will have his first post-FOMC press conference afterwards. We are expecting that they will leave their policy rate on hold and confirm the Quantitative easing program will end as scheduled in June.
The US FOMC will meet tonight, and Bernanke will have his first post-FOMC press conference afterwards. We are expecting that they will leave their policy rate on hold and confirm the Quantitative easing program will end as scheduled in June.
April 21, 2011
Australian Terms of Trade
Australian Import prices rose 1.4% in Q1, above the median of 0.9%. This increase was driven largely by a rise on oil prices, as the unrest in the Middle East continues to place concerns on supply. Despite this, consumer goods such as electrical goods, furniture, toys and sports goods were all lower. Export prices were 5.4% higher, more than compensating for the rise in imports. As expected, it was commodities leading they way, as demand in the Asian region continues drive up the prices, especially that of coal. The net result is that Australia’s term of trade was 3.8% higher for the March quarter, and it has jumped 22% over the last year.
Today in Australia, the Producer Price index for the March quarter will be released.
Today in Australia, the Producer Price index for the March quarter will be released.
April 20, 2011
RBA Minutes
The RBA minutes from this months meeting were released yesterday, as the Board remain contempt so wait and see in terms of their stance towards monetary policy. The concerns to global output remain constant, with issues in Japan, Europe (debt issues) and the US recovery were all discussed. Global inflation is also well and truly on the radar, as commodity prices are on the rise, and the price of China’s exports have been
increasing. Despite the down side risks, Australia’s main export prices are expected to rise at higher than normal trend levels, and are likely to for some time. On the domestic front, the events in Queensland have complicated the accuracy in reading the underlying trend of the economy. Consumers still appear to be defensive and housing remains soft, however investment in the resource sector and the terms of trade will test the non-inflationary capacity of the economy.
In conclusion, there were no indications that the RBA would be tightening in the near term. The current policy still remains mildly restrictive, however medium term inflation remains as a concern. We are still expecting at least one hike before the end of the year.
Today will see the Westpac Lending Index for February and the International Trade price Indexes for Q1
2011.
increasing. Despite the down side risks, Australia’s main export prices are expected to rise at higher than normal trend levels, and are likely to for some time. On the domestic front, the events in Queensland have complicated the accuracy in reading the underlying trend of the economy. Consumers still appear to be defensive and housing remains soft, however investment in the resource sector and the terms of trade will test the non-inflationary capacity of the economy.
In conclusion, there were no indications that the RBA would be tightening in the near term. The current policy still remains mildly restrictive, however medium term inflation remains as a concern. We are still expecting at least one hike before the end of the year.
Today will see the Westpac Lending Index for February and the International Trade price Indexes for Q1
2011.
April 19, 2011
US Debt Woes
The big news overnight was that the rating agency, Standard and Poor’s, revised the US credit rating outlook to negative. The agency cited that the lack of planning for reducing the huge budget deficit and saw a material risk that there would be no political agreement to slash debt before 2013. As such, this would leave the US with an unfavorable debt to GDP ratio, especially in comparison to other AAA rated countries. S&P
also noted that there is a 1/3 chance that it would cut the US credit rating within 2 years.
Debt concerns in Europe were also heightened overnight, as rumors surfaced that Greek debt would be restructured or they would default.
The RBA Board Minutes for this months meeting will be released today, and their inflation and growth forecasts will be closely watched. It will be interesting to how they read the momentum of the economy, as there have been several indicators that are showing both positive and negative prospects.
also noted that there is a 1/3 chance that it would cut the US credit rating within 2 years.
Debt concerns in Europe were also heightened overnight, as rumors surfaced that Greek debt would be restructured or they would default.
The RBA Board Minutes for this months meeting will be released today, and their inflation and growth forecasts will be closely watched. It will be interesting to how they read the momentum of the economy, as there have been several indicators that are showing both positive and negative prospects.
Chinese Data
Chinese data released on Friday came in stronger than expected, with GDP growth for Q1 this year coming in at 2.1%. CPI was also higher than expected, rising by 5.4% (yearly adjusted) for the quarter, much higher than the expected 4.9%. As a result, China has once again lifted their reserve requirements by 50 basis points, in attempts to stop bubbles occurring on the back of credit. The PCB Governor Mr Zhou Xiaochuan stated that monetary policy would be tightening for some time.
There is no data in Australia today, however tomorrow will see the release of the April RBA Board minutes. We are expecting the minutes to confirm that the Board is comfortable with the mildly restrictive stance. Wednesday will see trade price data, and the Producer Price Index will be released before the Easter weekend.
There is no data in Australia today, however tomorrow will see the release of the April RBA Board minutes. We are expecting the minutes to confirm that the Board is comfortable with the mildly restrictive stance. Wednesday will see trade price data, and the Producer Price Index will be released before the Easter weekend.
April 15, 2011
New Motor Vehicle Sales
Australian New Motor Vehicle Sales for March rose by 1.9% after the 1.5% decline in February. This is a positive result for the Industry as car sales have been weak since the GFC.
Europe debt fears have worsened over night, as the German Finance Minister stated that Greek debt might need to be restructured after 2013.
Singapore tightened their monetary policy yesterday, as there is a growing concern that the Asian boom may cause the economies within the region to overheat.
There are no scheduled events in Australia today, however China is releasing numerous data including GDP,
Industrial production, Fixed Investment and CPI. Upbeat data could see the AUD reach a new post float high.
Europe debt fears have worsened over night, as the German Finance Minister stated that Greek debt might need to be restructured after 2013.
Singapore tightened their monetary policy yesterday, as there is a growing concern that the Asian boom may cause the economies within the region to overheat.
There are no scheduled events in Australia today, however China is releasing numerous data including GDP,
Industrial production, Fixed Investment and CPI. Upbeat data could see the AUD reach a new post float high.
April 14, 2011
Consumer Confidence Survey
The Westpac Melbourne Consumer confidence slightly rose in April, rising to 105 from 104 in March. Some commentators has described the index as a little disappointing, as Confidence is far from the 119 we saw last August, however it is still above the long term average of 100.
The DEWR Vacancy report, which is measured by the Internet Vacancy Index (IVI) rose by 10.3% in March (seasonally adjusted) after a 2.5% rise in February. The Skilled vacancy index, which is based on newspapers ads, fell by 1.8% in March. The data once again signifies that the economy is starting to reaccelerate in the aftermath of the Queensland floods and cyclone.
The RBA Governor, Glenn Steven, gave a speech in New York overnight, however he didn’t give any insights into his views on monetary policy in the near term. The speech focused on the rise of China and India and how it will lead to Asia becoming more important in terms of Global wealth and finance.
Barrack Obama outlined a series of budget cuts and tax increases in a speech overnight. The plan is designed to cut $4tn of the budget deficit over the next 12 years.
New Motor Vehicle Sales for March will be released in Australia today.
The DEWR Vacancy report, which is measured by the Internet Vacancy Index (IVI) rose by 10.3% in March (seasonally adjusted) after a 2.5% rise in February. The Skilled vacancy index, which is based on newspapers ads, fell by 1.8% in March. The data once again signifies that the economy is starting to reaccelerate in the aftermath of the Queensland floods and cyclone.
The RBA Governor, Glenn Steven, gave a speech in New York overnight, however he didn’t give any insights into his views on monetary policy in the near term. The speech focused on the rise of China and India and how it will lead to Asia becoming more important in terms of Global wealth and finance.
Barrack Obama outlined a series of budget cuts and tax increases in a speech overnight. The plan is designed to cut $4tn of the budget deficit over the next 12 years.
New Motor Vehicle Sales for March will be released in Australia today.
April 13, 2011
NAB Business Survey
The NAB Business Survey reported that there has been significant improvement in business conditions in March, as trading conditions and profitability have improved. Conditions in Queensland have enhanced in March, however the overall condition are still well below average. Business confidence did decline in March,though it still remains at above trend levels. Overall, the evidence suggests that the economy is reaccelerating and that the upside risks to inflation are increasing.
Japans nuclear problems worsened overnight, as the crisis was raised to a level 7, from level 5 and equal to that of the Chernobyl disaster.
Today is Australia will see Westpac-MI Consumer Sentiment and DEWR Skilled Vacancies released. Glenn Stevens from the RBA is speaking in New York Tonight.
Japans nuclear problems worsened overnight, as the crisis was raised to a level 7, from level 5 and equal to that of the Chernobyl disaster.
Today is Australia will see Westpac-MI Consumer Sentiment and DEWR Skilled Vacancies released. Glenn Stevens from the RBA is speaking in New York Tonight.
April 12, 2011
IMF Economic Outlook
The IMF World Economic Outlook downgraded Australia’s GDP forecasts for 2011 to 3.0%, from the previous estimate of 3.25%. The World growth forecast remains at 4.4% for 2011, with the high growth rates of the Asian economies leading the way (China 9.6% for 2011). The United States estimates have remained steady, with the IMF predicting 2.8% GDP growth this year.
The Australian interest rate market has continued to up the chance that the RBA will lift the cash rate by 0.25% by year-end. The futures market has currently priced in a 68% likelihood of a hike, up from the 28% chance that was priced before last week’s employment report. It is still our view that there is a 50/50 chance the RBA will hike twice this year, as strong commodity prices will likely see expansion in the resource sector.
The NAB Business survey for March will be released today.
The Australian interest rate market has continued to up the chance that the RBA will lift the cash rate by 0.25% by year-end. The futures market has currently priced in a 68% likelihood of a hike, up from the 28% chance that was priced before last week’s employment report. It is still our view that there is a 50/50 chance the RBA will hike twice this year, as strong commodity prices will likely see expansion in the resource sector.
The NAB Business survey for March will be released today.
April 11, 2011
AUD Continues Higher
The big news on Friday was that the AUD printed a post-float high of 1.0585 in the New York Trading Session. The AUD moved almost 3 US cents higher last week, as Global confidence levels increased which moved commodity prices higher along with an appetite for risk. Currency traders have currently priced in a about a 66% chance of a rate hike before year end, as last weeks employment report, along with upbeat US data have increased the upside risks to inflation.
The Chinese trade balance moved back into surplus in March to the tune of $0.14bn, after a deficit of $7.30bn in February.
It will be a relatively quite week on the news front in Australia, with only second tier data to be released. NAB will release their Business Survey for March, with the W-MI Consumer Confidence and New Car Sales also due. Glenn Stevens is speaking on Wednesday; however don’t expect any comments to be out of line with the current RBA rhetoric.
The Chinese trade balance moved back into surplus in March to the tune of $0.14bn, after a deficit of $7.30bn in February.
It will be a relatively quite week on the news front in Australia, with only second tier data to be released. NAB will release their Business Survey for March, with the W-MI Consumer Confidence and New Car Sales also due. Glenn Stevens is speaking on Wednesday; however don’t expect any comments to be out of line with the current RBA rhetoric.
April 08, 2011
Employment Data
Employment bounced back in March after a 10k decline in February, with 37.8k jobs created for the month. On another positive note, full-time employment rose by 32.1k, while part time employment was 5.7k higher. The unemployment rate has dropped back down to 4.9% with the participation rate remaining relatively steady at 65.8%. The continuing trend in employment growth, especially that of full time employment shows that the economy is benefitting from the soaring commodity prices. The tightening labour market will at some stage create wage pressures, so the RBA will keep a close eye on employment proceedings.
The ECB hiked by 25bp last night as expected. Despite the continued worries in Ireland, Greece, Spain and Portugal, inflation concerns have forced the bank to tighten, with the 1.25% cash rate described as accommodative.
No data in Australia today.
The ECB hiked by 25bp last night as expected. Despite the continued worries in Ireland, Greece, Spain and Portugal, inflation concerns have forced the bank to tighten, with the 1.25% cash rate described as accommodative.
No data in Australia today.
April 07, 2011
Housing Finance Approvals
Housing Finance approvals for Australia were weak (expected) yesterday, with owner-occupied approvals falling 5.6% for the month. All states saw falls, however Tasmania was hit the hardest with a 14% decline. After a recovery to finance approvals in the latter half of 2010, we were due for some retracement in this sector, but the November interest rate rise combined with the impact of the floods have hit approvals so far in 2011.
The Portuguese Government has finally acknowledged that they will have to accept Financial Assistance from the European Commission.
The March employment report is due today, with the market expecting 20k/25k new jobs. The market has priced for a no rate changed until Q1/Q2 2012, and the labour market trends are a key indicator to monetary policy settings.
The ECB will meet tonight, where it is expected that they will lift their cash rate. Inflation fears in England have materilised with QE program increasing the money supply.
The Portuguese Government has finally acknowledged that they will have to accept Financial Assistance from the European Commission.
The March employment report is due today, with the market expecting 20k/25k new jobs. The market has priced for a no rate changed until Q1/Q2 2012, and the labour market trends are a key indicator to monetary policy settings.
The ECB will meet tonight, where it is expected that they will lift their cash rate. Inflation fears in England have materilised with QE program increasing the money supply.
April 06, 2011
Cash Rate Unchanged
The Reserve Bank of Australia remained on hold yesterday, leaving the cash rate unchanged at 4.75%. This result was widely expected; as recent statements from the Boards members have consistently acknowledged that the mildly restrictive stance is appropriate. In its statement, the RBA recognised the continuing
expansion in the global economy, especially in Asia, which is driving commodity prices higher. With the terms of trade continuing to rise, our national income has grown significantly, improving our prospects in the medium to long term. The RBA did note that the savings rate is still high, however with unemployment falling the upside risks to wage growth (and therefore inflation) are materializing. With Australia’s prospects looking solid in the next few years, the upside risks to inflation will ensure that a tightening bias remains.
Australia’s international trade balance unexpectedly fell into deficit in February, to the tune of $205m. This comes after a $1433m surplus in January, as Queensland’s non-rural exports have been the main contributor to the decline.
The People’s Bank of China raised their interest rates last night by 25bp, the fourth increase since October.
The FOMC Minutes from the March 15 meeting stated that the US recovery was gaining traction. Several members have now increased there upside risks to inflation forecasts as QE2 continues to be laid out.
Today in Australia, housing finance approvals for February will be released.
expansion in the global economy, especially in Asia, which is driving commodity prices higher. With the terms of trade continuing to rise, our national income has grown significantly, improving our prospects in the medium to long term. The RBA did note that the savings rate is still high, however with unemployment falling the upside risks to wage growth (and therefore inflation) are materializing. With Australia’s prospects looking solid in the next few years, the upside risks to inflation will ensure that a tightening bias remains.
Australia’s international trade balance unexpectedly fell into deficit in February, to the tune of $205m. This comes after a $1433m surplus in January, as Queensland’s non-rural exports have been the main contributor to the decline.
The People’s Bank of China raised their interest rates last night by 25bp, the fourth increase since October.
The FOMC Minutes from the March 15 meeting stated that the US recovery was gaining traction. Several members have now increased there upside risks to inflation forecasts as QE2 continues to be laid out.
Today in Australia, housing finance approvals for February will be released.
April 05, 2011
ANZ Job Ads
ANZ Job Ads for March, released yesterday, rose by 1.4% for the month to be 19.2% higher year on year. Despite the fact that newspaper ads continued their current decline, Internet ads were significantly higher as business confidence appears to be remerging in the aftermath of the floods/tsunamis.
The Reserve Bank Board meets this morning, with their decision to be released at 2:30pm today. Every forecaster in the market is expecting the RBA to remain on hold, however the futures market has priced in a 4% likelihood of a drop in the cash rate. We can categorically say that there is no chance of this happening. The statement that will be released in conjunction with the Boards decision may provide some insight into
the Banks short-term monetary policy stance, as there is still some conjecture surrounding when the Board will make their next move. The strong AUD may provide the RBA with some breathing space in the short term, however rising commodity prices and an apparent reacceleration in credit growth will provide inflationary pressures in the medium term. As a result, predicting the next move is a little difficult.
The Trade balance for February will also be released today.
The Reserve Bank Board meets this morning, with their decision to be released at 2:30pm today. Every forecaster in the market is expecting the RBA to remain on hold, however the futures market has priced in a 4% likelihood of a drop in the cash rate. We can categorically say that there is no chance of this happening. The statement that will be released in conjunction with the Boards decision may provide some insight into
the Banks short-term monetary policy stance, as there is still some conjecture surrounding when the Board will make their next move. The strong AUD may provide the RBA with some breathing space in the short term, however rising commodity prices and an apparent reacceleration in credit growth will provide inflationary pressures in the medium term. As a result, predicting the next move is a little difficult.
The Trade balance for February will also be released today.
April 04, 2011
US non-farm payrolls
US non-farm payrolls came in stronger than expected on Friday night; rising 216k in March, after the 194k increase seen in February. As a result, the unemployment rate fell to 8.8%, as the United States is starting to see signs of recovery in the aftermath of the GFC. The strength of the US economy is the predominate driver of global confidence; hence Australia’s prospects are closely tied in with the performance of the US economy.
Treasurer Swan has stated that the recent natural disasters will cost the economy around $9bn, with lost coal production contributing $6bn. The reduced demand as a result of the Japanese earthquake will cost around $2bn, however the rebuilding efforts will likely boost demand for Australian commodities.
This week will be a busy week on the data front, with TD Securities inflation and ANZ Job Ads to be released today. The RBA will meet tomorrow, and are expected to remain on hold with International trade (Tues), Housing Finance (Wed) and Employment (Thurs) also to be released this week.
Treasurer Swan has stated that the recent natural disasters will cost the economy around $9bn, with lost coal production contributing $6bn. The reduced demand as a result of the Japanese earthquake will cost around $2bn, however the rebuilding efforts will likely boost demand for Australian commodities.
This week will be a busy week on the data front, with TD Securities inflation and ANZ Job Ads to be released today. The RBA will meet tomorrow, and are expected to remain on hold with International trade (Tues), Housing Finance (Wed) and Employment (Thurs) also to be released this week.
April 01, 2011
Retail Trade Figure
Retail trade rose by 0.55% in February after a 0.4% rise in January, contributing to a meager 3.6% increase over the last year. The department store sector continued to struggle and was 0.4% lower for the month, as online competition continues to drive customers away from the segment. Queensland saw a rise in their retail sales as the reconstruction efforts begin to take affect.
Australian building approvals fell 7.4% in February after an 11.6% decline in January. Private apartment approvals were down 20%, and continue the trend in this sector with Victoria, Queensland and South Australia being the hardest hit. For the first time in 5 months, private housing approvals were higher, rising by 0.2%.
Australian Private sector credit rose 0.5% in Feb, the strongest since January 2009. Credit growth in business rose by 0.6%, showing that we may be seeing a return to ongoing credit growth.
The RBA commodity prices for March will be release this afternoon.
Australian building approvals fell 7.4% in February after an 11.6% decline in January. Private apartment approvals were down 20%, and continue the trend in this sector with Victoria, Queensland and South Australia being the hardest hit. For the first time in 5 months, private housing approvals were higher, rising by 0.2%.
Australian Private sector credit rose 0.5% in Feb, the strongest since January 2009. Credit growth in business rose by 0.6%, showing that we may be seeing a return to ongoing credit growth.
The RBA commodity prices for March will be release this afternoon.
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