Daily Commentary BY THE CURVE TEAM –

Budget and Employment Ahead

17th of December, 2020

A budget update is expected either today or tomorrow and employment numbers for November are announced today.

Iron ore prices and an improving economy are expected to improve budget forecasts by over 5%. Lower than expected JobKeeper payments especially are set to improve the numbers.

Following strong payroll numbers on Tuesday, 40 000 jobs are expected to be added over November. This would only add to the much-improved outlook for the Australian economy and be another boon for the budget numbers.

A risk to the economy and budget numbers are the three Covid cases detected in NSW. They are not hotel quarantine cases, but community transmissions.

So far NSW has an impeccable track record of tracing these cases, so they do not lead to a broader spread. Despite this, if other states close their borders as a result then this will surely impact domestic tourism and economic activity.

The Federal Reserve made no change to their policy in their latest meeting, despite some expectations that the QE programme would be expanded. Similar to the RBA, the Fed have maintained that policy will remain accommodating for some time.

Josh Stewart

Associate - Money Markets