RBA Cuts Australian Rates As Expected To 0.75% Record Low

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    The Reserve Bank of Australia cut interest rates…


    Helmholtz Watson

    Reserve Bank of Australia models $200bn Bond Buying Stimulus – Goldman Sachs

    Goldman Sachs says RBA modelling is that -1% cash rate needed to hit inflation and unemployment goals, but RBA is reluctant to use negative rates.

    “we estimate that an equivalent degree of stimulus could be approximated by a $200bn QE program”
    “We continue to see a material risk that the RBA will deliver even deeper rate cuts and be drawn into unconventional policies”
    “For now, however, this remains outside our central scenario given Governor Lowe’s concerns about financial stability risks from loose monetary policy.”

    Via the Australian Financial Review


    Australia Trade balance for August

    AUD 5926m Surplus v expected +6,000m

    prior 7253m surplus, revised from 7,268m surplus
    exports -3% m/m
    imports flat at 0.0% m/m


    Australia September CBA/Markit PMI

    Services PMI: 52.4 and Composite: 52.0 ‘final’

    Australia preliminary PMIs:
    Manufacturing 49.4 (prior 50.9) & Services 52.5 (prior 49.1)

    Australia services PMI September 2019

    Strengthening demand conditions, both abroad and at home, contributed to business activity returning to growth in September.
    Overall new business intakes rose at the fastest rate for three months, supported by rising service exports.

    Sales growth was linked to increased marketing activities and low interest rates while a weaker Australian dollar also boosted overseas orders, according to anecdotal evidence.

    Higher inflows of new business also led to a further rise in backlogs of work. The Business Expectations Index rose to a 13-month high, with firms expecting improved economic conditions, an anticipated recovery in the housing market, as well as increased promotional activities and new service offerings to drive business activity over the next 12 months.

    Australian service providers expanded their workforce numbers for a second month running in September amid greater sales growth. However, there were mentions of cost cutting measures at some firms that reported lower employment.

    Input price inflation intensified in September. Higher costs for energy, wage increases and drought-related disruptions were cited as factors behind cost inflation. Firms however were unable to raise their fees at a pace anywhere near the increase in costs. Instead, output charges were raised at the slowest pace for five months and only modestly.


    JP Morgan Global Composite PMI Shows ” Among the nations for which September PMI data were available, rates of growth improved in the US, Italy and Brazil, while Australia returned to expansion following a contraction in August. ”

    This is with global economic expansion to joint-weakest rate since mid-2016 with global PMI at 51.2 in September, marking 84 consecutive months in expansion.


    [b]Australia NAB Business Confidence survey for September
    – 0 (prior 1) & Business Conditions 2 (prior 1)[/b]

    Business conditions improved from August but this is their sixth consecutive below-average month
    Both conditions and confidence remain below average levels (avge is 6)


    Broadbased trend decline since mid-2018 appears to have slowed
    Profitability and trading conditions remained below average
    Employment index edged up and is now above average … mirrors official data that show ongoing strong employment growth but subdued consumer spending
    Retail and wholesale (the goods distribution industries) are weakest
    Manufacturing and construction are also weak
    Forward indicators remain mixed, but overall suggest that conditions are likely to continue a below-average trend
    price indicators suggest inflationary pressure is likely to remain weak

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