RESEARCH CONTENT
Updated in-depth analysis on macroeconomic trends in Australia, together with a summary of interesting investment themes in Australian financial markets:
An overindebted household sector weighed down by high interest rates and noteable burden inflation, coupled with tight monetary policy that is constraining private sector credit growth, are both imposing important headwinds to Australian economic growth.
The RBA is looking through the few drivers of the inflation rate, which are arguably difficult to deflate with monetary policy alone, and thus monetary policy is expected to continue to remain tight keeping those headwinds in place.
This should ensure a backdrop of poor growth and continued Choice deflation. Although long end rates have gone sideways for some time since peaking in the 4Q23, they should eventually breakthrough key identified supports, which should lead to changes to the valuation of the AUD vs certain crosses.
Looking ahead, the employment data on the 16th , Retail Sales on 28th and Inflation on the next day will be key for markets. The first two have surprised with weakness lately, whilst the details in the inflation print will continue to provide evidence regarding the real underlying state of inflation, and whether the RBA risks tightening too much which could have a material impact on asset prices.
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