22
Nov
2011

>The missing link between debt and interest rates

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The Leader of the Opposition Tony Abbott delivered a broad ranging speech to the Sydney Institute last night.It covered many issues, but one issue Mr Abbott noted was:

“Less borrowing means lower interest rates.”

This throw away line is dreadfully wrong.

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21
Nov
2011

>Priced for economic ruin?

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The RBA will cut interest rates to 2.75% around the middle of 2012 and leave them there until the start of 2013. So say financial markets which this morning have reacted to the turmoil in the US fiscal debate, ongoing ructions in the Eurozone, signs of a rapid cooling in Chinese growth and ongoing fragility in the local economy to price in a cash rate lower than the low point (3.0%) reached during the GFC.

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21
Nov
2011

>Inflation: Dead, buried, cremated

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Scouring through the RBA Chart Pack each month beats reading 100 articles on where various people think the economy is or maybe going. It presents data and information on sectors of the economy in a no-frills, easy to analyse way. Each chart contains a myriad of information that feeds into the RBA Board deliberations each month on monetary policy. It’s a must view every month.

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21
Nov
2011

>MYEFO and the Parliament

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Opposition Leader Tony Abbott is being a bit cute arguing that the Parliament should sit during December to consider the contents of the Mid-Year Economic and Fiscal Outlook (MYEFO).It’s cute for a few reasons, not least because there is still no set date for the Government to release this year’s MYEFO.

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20
Nov
2011

>Interest Rate Betting – No change in December is Odds On

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Update with odds from Centrebet

In addition to the futures and overnight index swaps market providing opportunities for market participants to “bet” on the next RBA interest rate move, my friends at Centrebet, Sportsbet and the TAB offer betting odds on the next interest rate move.(Please let me know if you are aware of other bookies betting on the interest rate market.)

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17
Nov
2011

>Economists and Traders – Like Chalk and Cheese

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Christopher Joye’s particularly interesting and well-reasoned article heredid a good job shedding some light on the similarities and differences between money market traders and market economists.His conclusions were largely based on an assumption that market economists and traders were trying to do a similar thing, that is, working out where markets were going.The difference was that traders take a shorter run perspective and economists or strategists look at the longer run and are required to produce “point” forecasts (e.g., the cash rate will be 3.25% in December 2012).

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17
Nov
2011

>Interest Rate Futures – Not So Great Expectations

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The interest rate futures market in Australia has staged a stunning rally in recent months, and has rallied even more early today on the end of day stock rout in the US and growing concerns (if they could grow any more) of a horrible outlook for global economic activity into 2012.

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16
Nov
2011

>Yet More Great Big New Facts on Tax

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I have been thinking some more about Australia’s fiscal position and the oppressive tax take of the Howard Government especially when the tax to GDP ratio hit an all time high of 24.1% in 2004-05 and 2005-06.

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16
Nov
2011

>An Update – More Great Big New Facts on Tax

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My post from yesterday, Some Great Big New Facts on Tax, generated a fair bit of feedback, some good and some highly emotional.Those critical unfortunately had a high disposition to abuse and filth, but did not once provide any alternative data source to refute the facts.The reason for that is obviously because the numbers in my piece were correct.

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16
Nov
2011

>Labor Cost Growth – Slipping Below Neutral

>The Labour Price Index (LPI) data for the September quarter released this morning showed a very low 0.7% rise. In the last 10 years, there has only been one quarter – September 2009 during the depths of the GFC – when there has been a smaller increase. Perhaps not coincidently, this very low LPI occurred in the same quarter (September 2011) where underlying inflation plummeted to a 14 year low of just 0.3%.

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