The RBA meets on 7 Sep. The data was strong in Q2, but the outlook is dimmer due to Delta. Bond market capacity makes faster QE unlikely. The most likely outcome is to pre-commit to buy at 4bn per week until at least Feb’22.
The RBA can push back the constraints on their Bond Purchase Program by buying beyond May’32 and buying more Semis. Doing both would create scope to ease policy by accelerating QE, if that was required.
There are three main problems with RBA QE: The RBA owns too large a share of the lines it does buy. The tenor of the bonds they buy is shortening. And Semis want to issue longer than the RBA buys to fund infrastructure.
The gross flows data shows that the NSW lockdowns in July were damaging. The longer the lockdown, the greater the damage … so the worst is yet to come.
The minutes to the RBA’s August meeting confirm that the Board did discuss reversing July’s decision to taper bond purchases
The RBA has ‘looked through’ the delta-outbreak, and retained some of the upgrade that drove the July taper. A downgrade that drives easing is plausible, but it’ll take some time for the data to make the case
The decline of the unemployment rate to 4.9% in February caused the market to substantially reduce the implied probability of
The Sumner stuff on per-capita measures of nominal income growth made me wonder if it made more sense to think
The annual revisions to GDP, and a weak 0.3%qoq in Q3 , mean that the GDP boom of H1’18 has
The RBA has set things up to resume the easing cycle that began in 2011 (I never believed in the whole ‘neutral’
There was some confusion about core CPI yesterday, thanks to the divergence between trimmed mean CPI & weighted median CPI
The reporting of recent AUD strength is getting a little unbalanced. See here for an example. This tone really gets