CommBank Global Economic & Markets Update podcast

Fiscal policy and the public sector capex outlook

The Federal Budget bottom line is tracking much better than expected at the time of the March budget. Improvements in the underling economy suggest the Budget deficit in 2021/22 could come in approx. $A40bn lower than the most recent estimate of $A79.8bn. Stephen Halmarick, Chief Economist joins Belinda Allen, Senior Economist to discuss why we have seen such an improvement and why this will be important as the RBA tackles higher inflation by higher interest rates. Belinda also discusses the lift in the public sector capital expenditure pipeline but also how the headwinds of capacity constraints could see work delayed or cancelled.

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Markets Research disclaimers which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not intended to be an investment research report. The information contained in this report is approved and distributed by Global Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Where ‘CBA data’ is cited, this refers to the Bank proprietary data that is sourced from the Bank’s internal systems and may include, but not be limited to, credit card transaction data, merchant facility transaction data and applications for credit. As the statistics take into account only the Bank’s data it may not reflect all trends in the market. All customer data used, or represented, in this report is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy Statement. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations are reasonably held based on the information available at the time of its compilation but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made.

Reap what you sow

Inflation is too high in the large western economies and central banks are acting aggressively to lift interest rates to bring inflation down. This will be costly to economies. In our latest podcast Joseph Capurso, Head of International Economics and Carol Kong, Associate Economist discuss the outlook for the global economy and central banks for the US, UK, Europe, Canada, China and Japan with Belinda Allen, Senior Economist. In short we predict weak global economic growth in 2023 and recessions in several large economies.

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Markets Research disclaimers which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not intended to be an investment research report. The information contained in this report is approved and distributed by Global Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Where ‘CBA data’ is cited, this refers to the Bank proprietary data that is sourced from the Bank’s internal systems and may include, but not be limited to, credit card transaction data, merchant facility transaction data and applications for credit. As the statistics take into account only the Bank’s data it may not reflect all trends in the market. All customer data used, or represented, in this report is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy Statement. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations are reasonably held based on the information available at the time of its compilation but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made.

Travelling Economist – United States

In our latest podcast Stephen Halmarick, Chief Economist and Belinda Allen, Senior Economist discuss Stephen’s recent trip to the US where he met with officials from the New York Federal Reserve, US Treasury, clients and other stakeholders. The feedback includes inflation is the number one issue in the US at the moment and the US Federal Reserve is lifting interest rates aggressively to control inflation and bring it back down to target. This is both the key focus economically and politically. Stephen also discusses the current view of Australia from US clients.

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Markets Research disclaimers which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not intended to be an investment research report. The information contained in this report is approved and distributed by Global Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Where ‘CBA data’ is cited, this refers to the Bank proprietary data that is sourced from the Bank’s internal systems and may include, but not be limited to, credit card transaction data, merchant facility transaction data and applications for credit. As the statistics take into account only the Bank’s data it may not reflect all trends in the market. All customer data used, or represented, in this report is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy Statement. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations are reasonably held based on the information available at the time of its compilation but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made.

 

Forecast change and May Household Spending Intentions

In our latest podcast Kristina Clifton, Senior International Economist and Belinda Allen, Senior Australian Economist, discuss the larger than expected RBA rate hike in June. Belinda also outlines the change in terminal cash rate projection and also the impact on economic growth and home price forecasts. The May Household Spending Intentions report showed a 2.9% lift in May after a fall in April. Home Buying, Health & fitness and Transport rose while Travel and Entertainment fell.

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Economic & Markets Research disclaimers, which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not investment research and nor does it purport to make any recommendations. The information contained in this report is approved and distributed by Global Economic & Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. The data used in the ‘Commonwealth Bank Household Spending Intentions’ series is a combination of the CBA Data and publically available Google Trends™ data. Any reference to the term ‘CBA data’ means the proprietary data of the Bank. As the statistics take into account only the Bank’s data, it may not reflect all trends in the market. All customer data used or represented is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Bank’s Privacy Policy. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations made are reasonably held and are based on the information available at the time of its compilation. The Bank makes no representation or warranty, either expressed or implied, as to the accuracy, reliability or completeness of any statement made.

Agriculture update – the turf war rumbles on

High and rising food prices have become a topic of broad discussion.  In this podcast, Senior Economist Belinda Allen is joined by Agri-Commodity Strategist Tobin Gorey to discuss how we got to this point.  And why it will take some time to resolve.  Russia’s invasion of Ukraine has been an important part of the story.  An already tightening crop-supply context starting back in late 2020 though is the major cause. 

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Markets Research disclaimers which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not intended to be an investment research report. The information contained in this report is approved and distributed by Global Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Where ‘CBA data’ is cited, this refers to the Bank proprietary data that is sourced from the Bank’s internal systems and may include, but not be limited to, credit card transaction data, merchant facility transaction data and applications for credit. As the statistics take into account only the Bank’s data it may not reflect all trends in the market. All customer data used, or represented, in this report is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy Statement. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations are reasonably held based on the information available at the time of its compilation but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made.

The outlook for residential construction and spotlight on WA

The outlook for residential construction is softening with headwinds including falling demand, rising interest rates and elevated construction costs. In this latest podcast, Belinda Allen, Senior Economist and Stephen Halmarick, Chief Economist discuss the outlook for the sector, including the impact from a return of net overseas migration. Stephen also discusses a recent trip to Western Australia where staff shortages, the return of overseas students, a bumper wheat crop as well as issues in the construction sector are all being faced.

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Markets Research disclaimers which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not intended to be an investment research report. The information contained in this report is approved and distributed by Global Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Where ‘CBA data’ is cited, this refers to the Bank proprietary data that is sourced from the Bank’s internal systems and may include, but not be limited to, credit card transaction data, merchant facility transaction data and applications for credit. As the statistics take into account only the Bank’s data it may not reflect all trends in the market. All customer data used, or represented, in this report is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy Statement. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations are reasonably held based on the information available at the time of its compilation but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made.

A change of Government and the implications

In our latest podcast Gareth Aird, Head of Australian Economics and Belinda Allen, Senior Economist discuss the implications from the change in Government. In short we retain our economic and RBA forecasts as at this early stage there is little change in policy that requires us to revisit our forecasts. There will be some policy shifts, particularly around child care, health, aged care, housing and climate change.  But they don’t change the economic picture over the near term.  We also discuss the election result in the context of recent labour force and wages data and our outlook for the RBA.  We expect the RBA to deliver a 25bp increase in the cash rate at the June Board meeting.

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Markets Research disclaimers which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not intended to be an investment research report. The information contained in this report is approved and distributed by Global Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Where ‘CBA data’ is cited, this refers to the Bank proprietary data that is sourced from the Bank’s internal systems and may include, but not be limited to, credit card transaction data, merchant facility transaction data and applications for credit. As the statistics take into account only the Bank’s data it may not reflect all trends in the market. All customer data used, or represented, in this report is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy Statement. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations are reasonably held based on the information available at the time of its compilation but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made.

CBA Household Spending Intentions April 2022

The CBA Household Spending Intentions Index fell in April from a record high in March. The index was down by 3.8%/mth in April with the index printing at 112.3. In this podcast Belinda Allen, Senior Economist and Stephen Halmarick, Chief Economist discuss the drivers of April’s results including gains in Travel, Entertainment and Retail and falls in Home buying, Health & fitness and Transport. The HSI index though reflects the strength in both the activity side of the Australian economy, as well as strong prices as the interest rate cycle commenced in May.

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Economic & Markets Research disclaimers, which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not investment research and nor does it purport to make any recommendations. The information contained in this report is approved and distributed by Global Economic & Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. The data used in the ‘Commonwealth Bank Household Spending Intentions’ series is a combination of the CBA Data and publically available Google Trends™ data. Any reference to the term ‘CBA data’ means the proprietary data of the Bank. As the statistics take into account only the Bank’s data, it may not reflect all trends in the market. All customer data used or represented is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Bank’s Privacy Policy. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations made are reasonably held and are based on the information available at the time of its compilation. The Bank makes no representation or warranty, either expressed or implied, as to the accuracy, reliability or completeness of any statement made.

The RBA’s hiking cycle

It was a big week for the Reserve Bank of Australia (RBA) with the first lift in the cash rate since 2010. The RBA raised the cash rate from 0.10% and 0.35%.  The large Q1 22 CPI result was the clear catalyst for the hike.  And the RBA have gone from wanting to see inflation rise to be “sustainably within the target band” to inflation fighters in a matter of months. In this podcast Gareth Aird, Head of Australian Economics and Belinda Allen, Senior Economist discuss the hiking cycle and what to watch for as interest rates lift.

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Markets Research disclaimers which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not intended to be an investment research report. The information contained in this report is approved and distributed by Global Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Where ‘CBA data’ is cited, this refers to the Bank proprietary data that is sourced from the Bank’s internal systems and may include, but not be limited to, credit card transaction data, merchant facility transaction data and applications for credit. As the statistics take into account only the Bank’s data it may not reflect all trends in the market. All customer data used, or represented, in this report is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy Statement. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations are reasonably held based on the information available at the time of its compilation but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made.

Don’t forget about fiscal policy to manage inflation risks

With all the focus on monetary policy and the upcoming hiking cycle by the RBA, the role of fiscal policy can’t be forgotten as a way to manage inflation risks. In this podcast Stephen Halmarick, Chief Economist talks with Belinda Allen, Senior Economist about how the better economic outlook, both through nominal GDP and commodity prices suggests the actual budget deficit for 2022/23 could be considerably improved. It will be important that fiscal policy is allowed to tighten via the automatic stabilisers and this will help limit the need for higher interest rates and help contain the risks from higher inflation.

 

------ DISCLAIMER ------

Before listening to this report, you are advised to read the full Global Markets Research disclaimers which can be found at www.commbankresearch.com.au. Information in this podcast is of a general nature only. It does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. This report provides general market-related information, and is not intended to be an investment research report. The information contained in this report is approved and distributed by Global Markets Research, a business division of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (“the Bank”). The information is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or other financial instruments. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Where ‘CBA data’ is cited, this refers to the Bank proprietary data that is sourced from the Bank’s internal systems and may include, but not be limited to, credit card transaction data, merchant facility transaction data and applications for credit. As the statistics take into account only the Bank’s data it may not reflect all trends in the market. All customer data used, or represented, in this report is anonymised and aggregated before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy Statement. The Bank believes that the information in this presentation is correct and any opinions, conclusions or recommendations are reasonably held based on the information available at the time of its compilation but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made.