Daily Commentary BY THE CURVE TEAM –

Covid Cases Rise as Big Data Points Arrive

27th of July, 2020

Another weekend of rising case numbers leads us into a week a large data releases.

This week is headlined by the release of the quarterly inflation. Typically the release is keenly awaited and should be of particular interest as the number is expected to print negative following a collapse in economic activity from Covid induced lockdowns. As Covid cases rise though the CPI release may very well be trumped in the headlines.

There were over 800 new cases in Victoria over the weekend which matched the peak of the first wave of Covid-19, which sets a very ominous tone for the week ahead. Yesterday’s 453 case in the single state was only 5 shy of the previous peak in late March. Most concerning is that yesterday’s numbers were made up almost entirely of community transmissions, unlike the first wave which was predominantly inboard travellers.

This new spike in cases means the government’s metamorphic bridge to the other side is further away. For some time there was hope that Q2’s CPI release out Tuesday would capture the bottom of the trough however that now appears unlikely. Current estimates are for headline inflation to fall by 2.0% Q/Q contributing a -0.4% to the yearly tally.

We will also hear this week from the RBA, with Assistant Governor Christopher Kent speaking on a Webinar for a financial markets conference this morning. We will also hear later this week from the Australian Office of Financial Management CEO Rob Nicholl who will provide an economic update from the interesting perspective as the issuer of the federal government’s debt. He will no doubt make comment on today’s launch of the government’s new ultra-long 2051 bond.

Whilst all these speeches and data releases will be crucial updates for the medium term outlook, that all remains hinged on the number of people infected by Covid and the potential economic disruptions of lockdown and containment measures.

Matthew Dunshea

Client Relationship Manager