Category: Economics and Banking

Bonds Are Betting Against The Fed – And The Treasury?

Things remain in interesting territory for now as leading indicators are all over the show, and many are betting against the FED which has indicated it is not ready to even consider cutting interest rates any time soon, meantime the US Treasury may have other ideas…

U.S. Treasury yields a year from now are forecast to trade sharply lower than the level expected by bond strategists polled by Reuters just one month ago, underscoring how much financial markets have diverged this year from the central bank’s view.

While the U.S. economy grew at an annualised 2.9% in the final quarter of last year, it is clearly losing momentum. Market traders and policymakers differ on the severity of the coming downturn, as well as the likely policy response.

The latest edition of our finance and property news digest with a distinctively Australian flavour.

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Is There More Inflation Waiting In The Wings?

The ABS Released their latest Producer Prices Indexes today. Contains a range of producer price indexes in the Australian economy, comprising mining, manufacturing, construction and services industries.
Final demand (excluding exports) rose 0.7% this quarter and rose 5.8% over the past twelve months.

These are intermediate price rises which will flow into inflation later suggests that in some sectors like construction, costs are set to rise further.

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Up To 4.5% And Then Hold Says The Bank Of Canada!

The Bank Of Canada lifted rates by a further 25 basis points overnight, to 4.5%, and they continue QT. But they say they will hold now and pause to assess the impact of the rises.

In addition, they will start to publish minutes of their discussions, and also will hold losses on their accounts, rather than sending them back to Government.

Important signals which other Central Banks are likely to emulate and its worth noting how much lower rates in Australia are thanks to a series of lower hikes in Australia. Yet here, inflation was reported as higher than expected yesterday – perhaps we need higher rates here?

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Regional Australia Is Another Country!

The latest from our surveys relating to households in Regional areas versus Suburban and City areas with a focus on the use of branches, and access to cash.

We find that regional areas are much heavier users of branches and cash, relative to other areas – and Canberra in particular.

This may well explain why those based in the ACT are so far removed from the real issues faced every day by regional households and businesses.

Time to get the Senate to start their review, as I discussed with Robbie Barwick in my live show recently. https://youtu.be/OijlQNTVwtU

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DFA Live Q&A: HD Replay Robbie Barwick: Time For A Public Bank

This is an edited version of a live discussion with Robbie Barwick from the Australian Citizens Party. In this show we will dissect the current financial system and consider how banking can be brought into line to serve the people, not profit from them.

https://citizensparty.org.au/

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FINAL REMINDER: DFA Live Q&A 8PM Sydney – Time For A Public Bank!

Join me for a live discussion with Robbie Barwick from the Australian Citizens Party. In this show we will dissect the current financial system and consider how banking can be brought into line to serve the people, not profit from them.

https://citizensparty.org.au/

You can ask a question live!

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Should Governor Lowe’s Term Be Extended?

RBA Governor Lowe’s term is up for review later in the year. The current review of the Australian Central Bank will report around March, so what is the likely outcome.

Bloomberg reports on economists’ views of what might happen. But the elephant in the room is that inflation has been caused by poor monetary policy over the past couple of decades. or in other words, the RBA helped create the inflation problem they are now trying to defuse.

Maybe someone outside the Martin Place bubble would be more effective in helping to take the country forward.

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Its Time To Regulate BNPL Properly!

The current Treasury review of Buy Now Pay Later lending highlights the contentions around the issue. Those with existing Credit Licenses of course argue that BNPL providers should also play on the same level playing field.

Many under financial stress are reaching for BNPL and some are ending up paying high effective interest rates. APRA changes also shape the game.

The sector does need proper regulation. Will the Government cave or stick?

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Low Distressed Sale Counts Do Not Prove The Property Market Is Fine!

We look at the question of distressed listings and sales, which appear to be quite low at the moment. Some therefore argue that things in the property market are just fine.

However, apart from the question of how distressed sales are defined and identified, the truth is that some households are being given the option to sell as a normal not distressed sale. This is better for the bank, and potentially might be something which given enough equity in the property is worth considering. But it is really important to get the right independent advice first!

Bottom line is low distressed sale counts are not a signal of a buoyant market.

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You Asked, We Answered: With Tarric Brooker

Journalist Tarric Brooker and I chew over a range of audience questions in out Friday session today, from property prices and monetary policy to China demographics.

Thanks to all those who sent in questions. Tell us what you think of this format.

https://avidcom.substack.com/p/charts-from-dfa-q-and-a-january-20th

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