Economic and market news
In a quiet week for market and economic news, there has been a focus on a change in tone from Reserve Bank of Australia about the need for further interest rises to slow inflation. The Governor’s latest speech was considered very ‘hawkish’, suggesting at least one further 25 basis point increase will be necessary to bring inflation back to the upper bound of the 2-3 per cent target in a timely way. She was reported as stressing that, in contrast to commentary from the Prime Minister and Treasurer, inflation is now being domestically driven, by demand outstripping supply. She noted in particular the contribution that wages is growth is making to the stickiness of services price inflation. Despite this tone, markets are not yet pricing in a high probability of a further policy tightening, although there has been some movement in the pricing for February.
Australian indices
ASX 200: Was down by 0.89 per cent this week, to close at 7015.2 points on Tuesday.
All Ordinaries: Also fell, 0.91 per cent, over the week, closing at 7223.1 points on Tuesday.
Government Bonds
Government Bond Yields (Source: Bloomberg)
|
NAME |
COUPON |
PRICE |
YIELD |
1 DAY |
1 MONTH |
1 YEAR |
|
GTAUD2Y:GOV Australia Bond 2 Year Yield |
0.25
|
92.54 |
4.22% |
-5 |
-15 |
+110 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.75 |
93.52 |
4.20% |
-6 |
-24 |
+90 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.00 |
88.08 |
4.49% |
-7 |
-32 |
+98 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
84.14 |
4.69% |
-7 |
-37 |
+84 |
Reserve Bank of Australia (Source:RBA)
|
RBA CASH RATE TARGET (RBATCTR:IND) CURRENT (per cent) |
MOST RECENT DECISION (percentage points) |
MOST RECENT CHANGE (percentage points) |
1 YEAR PRIOR (per cent) |
|
4.35 |
+0.25 (7 November 2023) |
+0.25 (7 November 2023) |
2.85 |
Currencies (source:RBA)
As at the close on 28 November, the AUD/USD had risen 0.70 per cent over the week to 0.6623. The AUD/RMB also rose, up 0.96 per cent in the period, closing at 4.7365 on Tuesday.
Venture Capital
This week it was revealed that HSBC Australia is hoping to exploit the collapse of Silicon Valley Bank and become the first major bank in the country to offer a venture debt product. It was reported that it is hoping to invest as much as $200 million in the Australian market.
High-growth start-ups struggle with meeting the criteria for typical loans. Rather than an equity investment, venture debt allows entrepreneurs to raise capital without setting a valuation or diluting their ownership stake.
Property
Activity in the commercial property market is continuing, with investors purchasing shopping centre assets worth almost $200 million in the past week alone. The sheer volume, and the sub 6 per cent yield, is more evidence of the attraction of bricks-and-mortar retail underpinned by essential services.
New data show that thenational residential property auction clearance rate fell again this week. The preliminary clearance rate fell about 3 percentage points to 65.9 per cent – the lowest since mid-March. This was said to be ‘a clear sign’ that selling conditions are swinging back towards buyers. Both Sydney and Melbourne’s clearance rates were at below average levels, despite total listings rising above the five-year average.
