[Corporal]

Australia saw weakerr than expected full time jobs…

[article]1833[/article]

[Truman]

Aussie bond yields dropped after the economy unexpectedly lost jobs in October and the jobless rate increased to 5.3%.
Benchmark 10-year yields slid as much as 10 basis points to 1.17%, while traders boosted odds that the central bank will cut interest rates.

[Truman]

The 10-year yield is expected to drop to 0.85% in the first quarter of 2020 according to the median forecast of 15 analysts surveyed by Bloomberg.

UBS’ house view is that the RBA will lower its cash rate target in December and once more in the first half of 2020 to 0.25 per cent as a global growth slowdown convinces the Federal Reserve to reduce its benchmark to one per cent.

Further RBA rate cuts will probably convince markets to start pricing in the prospect of quantitative easing (QE), though the central bank is likely to deploy other tools first, such as open-market operations to inject liquidity and to try and get banks to pass through the full amount of lower interest rates to consumers, she said, citing UBS’ house view. “That’s why we don’t think they will really need to do QE because you just need to tell the markets that you could do that and you are willing to do that if needed, and then I think that would have quite a big impact on bonds,” she said.

In the event that the RBA does start QE, the impact would be modest as a percentage of gross domestic product, UBS said in its market outlook for 2020 to 2021.

The free float of Australian government bonds – those not held for foreign-exchange reserve managers and central banks or others unlikely to sell – is about 40 per cent, or A$250 billion (S$231 billion), UBS said. That limited amount means the RBA may only need to buy a small quantity to obtain “a large, persistent, decline of bond yields”, it said.

BLOOMBERG

[Truman]

RBA Deputy Gov. Debelle

The unemployment rate in October came in at 5.3% versus 5.2% prior.
The low level in 2019 bottomed at 4.9%.
The Australia’s unemployment rate has not been at 4.5% since November 2008.

Need unemployment down at 4.5% to lift wages
Need continued strong employment growth

Allegations on Westpac anti-money laundering are disturbing and serious

[Author]

Posts