Category: Economic Data

A Week Of Critical Signals

This week we get a series of economic signals, as several countries will be delivering their latest figures. China’s inflation figures already surprised on the high side on Monday although they were still relatively modest at 1.5% year-on-year in March. But that still saw yields on China’s 10-year government bonds fall below U.S. Treasury yields for the first time in 12 years.

Later in the week, the U.S. and the U.K. will be reporting their inflation numbers. The U.S. is expected report that the pace of inflation in March rose at annual rate of 8.4%, a four-decade high. The conflict and its impact on supply chains, notably food, had not yet figured in CPI data, which was nonetheless already at 40-year highs. The probability of a US recession next year is now sitting at 40%.

And, the spotlight will also fall on the RBNZ, BoC, and ECB and their interest rate decisions. On Thursday the economic calendar will start with Australia’s employment numbers for March.

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

FINAL REMINDER: DFA Live 8pm Sydney Tonight: Latest Household Stress And Mapping Q&A

Join us for a live discussion as I explore the latest from our surveys and models. Where are prices trending, and how are financial stress footprints trending.

You can ask a question live. The post code database will be online.

Go to the Walk The World Universe at https://walktheworld.com.au/

A Deep Dive On Household Debt And Income Ratios…

We look at the latest data from the RBA on household ratios, and ask how meaningful they are, given the assumptions and basis of calculation on which they are based.

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Below The Budget Blizzard

I have to say last week’s media coverage of the Budget was at least sycophantic, at worst deceptive. Take the Tele’s working class plan headline. The coverage missed the point, and in fact the short term-cash splash – aka bribe will soon be totally consumed, and people will generally be worse off.

There were a couple of high points in the online media though which go to the heart of the story. This from Alan Kohler in the New Daily, focussing on the strategic errors which were made in 2020, thus creating a higher than needed debt burden for the country.

And this from Michael West Media, By Callum Foote arguing that Frydenberg hides $30 a week tax increase for most Australians.

Treasurer Frydenberg announced a number of cost-of-living measures in his budget speech.

These include a one-off $250 cost of living tax offset for more than 10 million low and middle-income earners, a boost to people receiving the low and middle-income tax offset by $420 for the 2021-22 financial year as well as halving the fuel excise for six months.

What the Treasurer didn’t say is that the additional $420 tax offset for low and middle-income earners he mentioned will stop entirely at the end of this financial year, on June 30.

The extra cash bumps the tax offset up to $1500 this year which ends on June 30.

This means that despite the extra cash given to them this year, those on this tax offset will be $1500, or almost $30 per week, worse off.

A New Financial World Order – Or Just A Ruble Gold Gamble?

Are we at the edge of a new financial world order, triggered by the Ukraine conflict and Russia’s move to gold back the ruble?

Well, we have been noting the fact that both China and Russia have been adding to their Gold Holdings in recent years, in a deliberate strategy to be able to insulate their currencies in time of crisis from the mighty USD.
Since 2005 alone, Russia has more than tripled its gold holdings, so the Russian Federation has the fifth largest officially reported gold reserves after the USA, Germany, Italy, and France. In comparison, by the way Australia is nowhere…

Now, amid all the noise and fury from the Russia Ukraine conflict, is a development which may well shake the international financial system to its core, because the Russian central bank restarted buying gold from banks and will pay a fixed price of 5,000 rubles ($52) per gramme between March 28 and June 30, the bank said on Friday.

The central bank, which suspended gold purchases from banks in mid-March to meet increased demand for the precious metal from households, said the resumption of buying would help ensure sustainable supply and the uninterrupted functioning of gold producers.

The current decision was made against the background of new Western sanctions against Russian banks. The purchases are a clear statement against dollar hegemony, especially when combined with the fact that more than half of all U.S. Treasuries have been dumped since January 2014.So when did Moscow start planning a gold-backed ruble? Economist Jude Wanniski had recommended this as early as 1998 in a sensational editorial in the Wall Street Journal.

Only a gold-backed ruble could free Russia from the debt crisis and establish international acceptance of the Russian currency, he said at the time. It seems that Vladimir Putin has taken up this idea again two decades later.

Go to the Walk The World Universe at https://walktheworld.com.au/

Where Is Stress Really Going To Hit? – With Steve Mickenbecker

I talk financial stress with Steve from Canstar, as their survey reveals the size of the problem. And we discuss both the cause and potential mitigation strategies.

Steve Mickenbecker is in Canstar’s Group Executive Team, bringing more than 30 years of experience in the Australian financial services industry. As a financial commentator for Canstar, Steve enjoys sharing his expertise across topics such as home loans, superannuation, insurance, mortgages, banking, credit cards, investment, budgeting, money management and more. https://www.canstar.com.au/team-members/steve-mickenbecker/

Go to the Walk The World Universe at https://walktheworld.com.au/

My Two Cents Worth On The Upcoming Budget!

Josh Frydenberg’s March 29 budget — his fourth as Treasurer — is expected to reveal a big deficit for 2022-23. In December, it was estimated it would be just under $99 billion, but the updated figure is expected to have tumbled by tens of billions of dollars. That said, we still have a structural deficit of close to $1 trillion dollars, and the costs of that debt will rise, as interest rates rise, so that’s a problem. And the structural deficit will continue, that’s to large spending on programmes like NDIS, Centrelink Payments, Medicare, and Defence.

And although the current year deficit will fall from $99 billion as predicted, it is worth remembering that to date the Government has promised to spend some additional $70 billion over a number of years on a range of programmes, some with frankly dodgy motivations (some might think pork-barrelling was a better term).

There will be some short-term relief, to assist with the cost-of living pressures, which according to recent surveys are driving household confidence lower. But the whole exercise is political.

The Government will of course go on talking about the $250 billion savings households are sitting on, thanks to COVID and Government payments over the past couple of years, but as I have shown before this is not equally spread across the population and taking in general terms about “household balance sheets are in good shape” belays the truth that averages mask, and many households are really up against it as costs of living rise, and with the prospect of higher interest rates ahead.

Go to the Walk The World Universe at https://walktheworld.com.au/

A Spotlight On North Ryde 2113

The latest in our deep dives on a post code. Today we look at a suburb north west of Sydney where units prices are lower than they were in 2017, and where relaxed planning regulations have created a transformed neighbourhood.

This is general discussion only, and the scenarios will change ahead.

You can find out more about our “One To One” service here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Are Rate Rises A Certainty In Australia?

One of the key questions for country is whether interest rates, which have been rock bottom for a couple of years are set to rise. The RBA was saying not until 2024 but have slowly been changing their tune, and the Fed lifted rates last week, and markets now think 50 basis points hikes are on the cards in the US.

The truth is markets are banking on significant rate rises over the next year or two. The ASX 30 Day Interbank Cash Rate Futures Implied Yield Curve is at 2.675 per cent in August 2023, remembering the official cash rate is currently 0.1%. This would see mortgage rates up by as much as 3%, or close to 5%. That would be a horror for many borrowers.

But then again, we know already banks have been steadily lifting their fixed rate mortgages from ultra low 1.99 to closer to 3%, and the costs of funds as shown by Bond Yields is rising, making banks needing to hike rates to protect margins.

So the tussle between the markets and the bank are going to get interesting. And for the record, I am expecting some rate movements higher later in the year, but not as much as the markets are signalling. Nevertheless households were reminded by Phil Lowe recently they need to plan to hold buffers because rates may well rise, even if such rate hikes wont dampened inflation.

And by the way the third element in all this is employment and wages growth. If inflation continues to burn bright, unemployment may rise alongside, leading to the stagflation scenario. And that would be good for no-one.

Go to the Walk The World Universe at https://walktheworld.com.au/