Daily Commentary BY THE CURVE TEAM –

Covid Challenge

12th of July, 2021

NSW continue to grapple with the growing covid outbreak.

Cases are tipped to rise above 100 today in Sydney despite the city going into its third week of lockdown. It will certainly detract from the spectacular economic recovery, which has been among the strongest in the world.

Victoria’s extended lockdown last year dragged significantly on economic activity. Only when they came out of lockdown did growth and activity across the country begin surging.

The RBA are optimistic that as soon as the lockdown is over, activity will rebound like other lockdowns. Perhaps being underestimated is the length of this lockdown, which was initially expected to be 2 weeks but looks likely to be extended an extra month.

Also, government support will be a key factor in how the economy holds up. Previous extended lockdowns had Jobkeeper and Jobseeker payments to support the economy. Since those programs have ended, lockdowns have only been brief, so naturally the economy rebounded when lockdown ended.

Case numbers will continue to be monitored very closely for the next two weeks to see if cases are contained. This will determine the length of lockdown. Specifics on state and federal government support will also be of interest.

In terms of data, the business survey for June and consumer confidence for July are released tomorrow and Wednesday respectively. Multiple outbreaks of covid across the country are likely to weigh on the results.

Similarly, employment for June is released on Thursday, which will likely be impacted for the next few months from covid outbreaks. Curve’s monthly insights for July will also be released tomorrow.

Josh Stewart

Associate - Money Markets