Bond & Equities
Financial markets struggled with bond and equities selling off. However, the weakness in the A$ (-1.3% w/w) insulated the impact for both global and emerging equities (in A$ terms) over the week. The uptick in bond yields at a local level was on the back of better than forecast employment numbers (+52k FT) and a surprise drop in the Un rate to 3.9% (forecast 4.2%, steady). Despite the strength of the headline figures, domestic business confidence fell sharply during Nov and is now in negative territory.
The RBA
Additionally, employment growth (ann) is running at ~2.4%, which is consistent with long term averages and labour force expansion, while much of the increase in FT has been driven by growth in Federal and State government expenditures, both of which we expect will (or should) decline in 2025 if the RBA (Reserve Bank of Australia) is to cut rates. With the RBA now not meeting until Feb (18th) there will be further jobs data out over the next 8 weeks, and we still believe that the overall weakness in the forward looking analysis of the economy alongside the continued moderation in inflationary expectations warrants a Feb rate cut.
The US
In the US, CPI (Consumer price index) data came in line with markets estimates (0.3% m/m, 2.7% y/y) and we now expect that the Fed will cut cash rates by a further 0.25% when it meets this week. This will take the Fed Funds Rate to 4.5%, a full 1.0% lower since it began reducing cash rates at its Sept FOMC (Federal Open Market Committee) meeting. We expect that given the overall strength of the US economy, alongside potentially further fiscal expansion by the new Trump administration United Stated Federal Reserve will now be more circumspect on any future rate cuts through the 1h25.
China
In China, the release of both the Producer Price Index (-2.5%) and CPI (0.2%) data last week continues to highlight the challenges of the economy towards a more sustainable growth footing, it remains to be seen. This week the focus will be on industrial production, retail sales and property investment. Continued weakness in these areas will be another blow to the Chinese authorities into the back end of the year.
Europe
In Europe, the European Central Bank reduced rates by a further 0.25% (to 3.0%). This week CPI data will be the main focus (f’cst 2.3% y/y). As this is our last weekly for the year, we would likely to thank all our investors for their support in 2024.
We wish you a safe and joyful Xmas and New Year and we look forward to doing it all again in 2025
This post has been prepared by Infinity Capital Solutions Pty Ltd (ABN 41 621 447 345) (AFSL Number 515762) (ICS). By reading or otherwise attending this presentation, you (the reader, recipient, or attendee) agree to be bound to the below terms and conditions.
This post and any supporting materials may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we may have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement and/or Target Market Determination before making any decision to purchase that financial product. The material in this post is correct and complete as of the date it was posted. Infinity is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within this post.
This post has been prepared by Infinity Capital Solutions Pty Ltd (ABN 41 621 447 345) (AFSL Number 515762) (ICS). By reading or otherwise attending this presentation, you (the reader, recipient, or attendee) agree to be bound to the below terms and conditions.
This post and any supporting materials may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we may have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement and/or Target Market Determination before making any decision to purchase that financial product. The material in this post is correct and complete as of the date it was posted. Infinity is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within this post.
