Tapas Strickland | Markest Research
Past Week
- What a week for Australian financial markets. The monthly inflation indicator printed hotter than expected at 4.0% y/y vs. 3.8% consensus
- Bonds sold off and rate hike pricing lifted sharply. Markets currently sit around a 55% chance of a hike by November 2024
- Offshore it has been very quiet. Canadian CPI printed on the high side. The Riksbank kept rates on hold and guided towards two more cuts for 2024
Comment
- In this article we revisit internal RBA analysis on alternative monetary policy paths that the Board could have taken during this hiking cycle
- The RBA modelled in early 2023 a scenario where cash rate increases would be front loaded to 4.8%, a slower lift to 4.8%, and the alternative of holding at 3.35%. Of course, since then the RBA has lifted the cash rate to 4.35%
- Realised outcomes have deviated sharply from modelled outcomes. Inflation is much higher than what these modelling scenarios predicted. Unemployment is also below where forecast scenarios had suggested
Week ahead
- In Australia, May Retail Sales (Wednesday) and RBA June Minutes (Tuesday) headline a quieter calendar. Building approvals and goods trade also out
- NZ sees the NZIER QSBO on Tuesday
- Politics in focus, with round one of the French parliamentary elections Sunday (and second round 7 July) and the UK election Thursday
- The ECB’s annual Sintra conference should generate plenty of commentary from ECB officials, with the Fed’s Powell and Williams also on the docket
- Elsewhere for Europe Preliminary June CPI is Tuesday, while the EU’s provisional tariffs on Chinese EVs is set to be introduced (Thursday)
- US has a holiday-shortened week with Independence Day (Thursday). Key data includes the ISMs (Manufacturing Monday, Services Wednesday) and the usual run of labour market data into Payrolls on Friday
- Canada has a public holiday on Monday, Unemployment (Friday) will be a key input into whether the BoC follows with another cut in July
Also in the What to Watch
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All prices and analysis at 28 June 2024. This information has been prepared by National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 ("NAB"). The content is distributed by WealthHub Securities Limited (WSL) (ABN 83 089 718 249)(AFSL No. 230704). WSL is a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited (ABN 12 004 044 937)(AFSL No. 230686) (NAB). NAB doesn’t guarantee its subsidiaries’ obligations or performance, or the products or services its subsidiaries offer. This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Past performance is not a reliable indicator of future performance. Any comments, suggestions or views presented do not reflect the views of WSL and/or NAB. Subject to any terms implied by law and which cannot be excluded, neither WSL nor NAB shall be liable for any errors, omissions, defects or misrepresentations in the information or general advice including any third party sourced data (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the general advice or information. If any law prohibits the exclusion of such liability, WSL and NAB limit its liability to the re-supply of the information, provided that such limitation is permitted by law and is fair and reasonable. For more information, please click here.
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