Economic and market news
The key Australian economic and market news this week was the decision by the Reserve Bank of Australia to raise the official interest rate by 25 basis points to 4.35 per cent. In doing this, it stressed that inflation in Australia has passed its peak but is still too high and is proving to be more persistent than expected. It highlighted that the latest reading on CPI inflation indicates that goods price inflation has eased further, but that services prices are continuing to rise briskly. The Bank’s new forecast for CPI inflation are for it to continue to decline. However, CPI inflation is now expected to be around 3 per cent by the end of 2024 and at the top of the target range by the end of 2025.
This was the penultimate policy decision of the year and considered a crucial test of the Bank’s inflation-fighting credibility. In particular, the new Governor had said recently that she would not hesitate to raise rates if required, and with the third quarter inflation outturn registering higher-than-expected many economists felt that more monetary policy tightening was needed now. Separately, the Federal Treasurer has recently made comments regarding the acceleration in inflation. Commentators have highlighted that his suggestion that the increase was not ‘significant’, and also not related to fiscal policy stimulus, was ‘verballing’ the Governor and brought into question the RBA’s independence.
In overseas economic news, the United States Federal Reserve held rates steady at its November monetary policy meeting this week. However, it was said to have ‘left the door open’ to tighten monetary policy more in the face of the unexpected strength of the economy in the third quarter, and ongoing stickiness of inflation.
The Bank of England also kept rates on hold, at a 15-year high. It is expected that a significant decline in domestic energy bills over coming months will see inflation falling back towards the 2 per cent target (from 6.7 per cent in September) over the next year.
Australian indices
ASX 200: Rose this week, by 2.90 per cent, to close at 6977.1 points on Tuesday.
All Ordinaries: Also rose, 3.00 per cent over the week, closing at 7176.6 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
|
92.19 |
4.30% |
-3 |
+28 |
+102 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
2.75 |
92.87 |
4.34% |
-2 |
+23 |
+79 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.00 |
86.56 |
4.69% |
-3 |
+15 |
+79 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
81.85 |
4.92% |
-3 |
+14 |
+71 |
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 7 November, the AUD/USD had risen over the week, 1.47 per cent, to 0.6439. The AUD/RMB also rose, up 0.93 per cent. in the period, closing at 4.6869 on Tuesday.
Venture Capital
Cardihab
Stoic investee Cardihab revealed an exciting new partnership with Albury Wodonga Health that will enable access to a quality virtual cardiac rehabilitation in regional NSW and Victoria.
Certa Therapeutics
Stoic investee Certa Therapeutics is presenting its Phase 2 Clinical Trial Data for its drug FT011 at the upcoming American College of Rheumatology ACR Convergence 2023 in San Diego.
Property
New data show that the market was unsettled ahead of the next official interest rate decision. The national auction clearance rate was revised down for the previous week to 62.9 per cent, the weakest since Easter. This week’s auction clearance rate in Victoria, the country’s largest auction market, was impacted by the Melbourne Cup long weekend, with its clearance rate falling to 60.8 per cent.
