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2019

Are Australian interest rates heading lower again?

Published: Wednesday 27 November 2019

  • Australian rate cuts starting to be factored in
  • China slowdown worrying banks
  • US–China trade deal in ‘final throes’.

Overnight news from Australasia has got tongues wagging. The Reserve Bank of Australia (RBA) mooted the idea of printing money (quantitative easing as we all know it). They don’t seem keen to do so, though, and markets took that as a sign that Aussie interest rates are heading lower again. The longer term Australian bond market rates are down and appear to be factoring in at least one more 25 basis point rate cut.
 
China industrial profits tumble

We also had some dire data from China showing a 9.9% drop in industrial profits compared to last year and concerns are being voiced over whether China’s banks can maintain their funding levels. On a brighter note, China now holds the record for the number of diplomats posted around the world and the talks with the US appear to be making progress. The US president says they are in ‘the last throes’ and ‘going really well’ but he does tend to say that about everything. The markets obviously believe him, though, because the US Dollar has strengthened a little and gold, the ultimate safe haven product, has slipped too.    
 
Corbyn scandal

Sterling traders are most interested in the YouGov MRP poll (“Multilevel Regression and Post-stratification” in full!), which will be released tonight. It was the most accurate at the last election and includes 50,000 respondents, so it is likely to be reasonably accurate this time as well. After Jeremey Corbyn’s disastrous (Labour activists’ words – not mine) interview with Andrew Neil, the gap is likely to have widened between the Conservatives and Labour, but this poll was probably too early to factor that in. As well as refusing to apologise to British Jews, Mr Corbyn’s sums did not add up. ‘Twas not good. However, as might be expected, Sterling has slipped a little as we draw nearer to the election itself.



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US markets closed tomorrow – beware currency volatility

As American traders will be shunning the dealing desk in favour of excessive turkey consumption, US markets are closed tomorrow. So no USD currency trades will be able to be booked for or settled on 28th. So today’s data diary is about as full as Americans will be by 5pm tomorrow. The biggies are Gross Domestic Product (GDP) growth data, which is forecast to have slowed marginally, Durable Goods Orders, which are expected to have improved, pending home sales, where a contraction is forecast and finally we are likely to see a sharp drop on crude oil stocks. The Federal Reserve will also publish their Beige Book, a localised view of the US economy. That’s a lot to absorb in one afternoon before clearing off for a four day food and shopping binge, so the US may well be volatile before the close.

That’s about your lot for today. Have a good Wednesday and a very Happy Thanksgiving to all our US readers.

At the Doctor's surgery

After sitting in the Doctor’s waiting room for an inordinate amount of time, the patients were getting quite agitated. People began tutting and muttering, such was the pent up anger. Eventually one elderly man stood up and walked across to the reception desk. The harried receptionist snapped, “I am sorry, Sir, but you will have to wait your turn. The Doctor has a patient with him and I can’t help the queue.”
The old guy waved his hand at her and said, “Oh that isn’t the problem.”
The receptionist’s face visibly relaxed as she said, “Sorry. How can I help?”
The old guy smiled and said, “I just wondered if Margaret Thatcher was still Prime Minister?”

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