Oz and the RBA endgame
Global Macro Strategist
Summary: Australia hasn't had a recession in almost three decades but now the economy is stuttering., making monetary policy all the more urgent. Read on to note the key dates in the weeks ahead.
• This Thursday, April 18, will see the always-volatile Jobs data where an employment gain of 15,000 is expected. This follows the number last month that was an abysmal miss.
• For those who don’t follow the Australian economy, the jobs market is the last leg holding up a country that has not seen a recession in over 27 years.
• This is also on top of a structurally slowing China (from quantity focused growth to quality focused growth), metal commodities off multi-year highs and the structural cracks in the Australia housing and consumer debt markets.
•On May 7 we have the next RBA meeting where the policymakers are more than likely set to deliver their first rate cut in over 2.5 years of sitting at neutral, with a key rate of 1.50%, vs. say 2.50% from the Fed or 1.75% from the Reserve Bank of New Zealand.
• Currently, the market seems to be implying a probability of a cut of c. 15.5% for the May 7 meeting, a number that could move either way given the upcoming jobs data on April 18.
• Finally, on May 10, should see the next quarterly update from the RBA on monetary policy, which will more than likely see downgrades on growth and inflation expectations.