Daily Commentary BY THE CURVE TEAM –

Daily Insights – Job Ads and QE

7th of September, 2021

Job Ads Fall

  • They were down 2.5% in August.
  • It follows a 1.3% fall in July (revised down).
  • The falls are small relative to the remarkable increase in the prior 12 months.
  • For example, NSW was down 10.3% in July but were 24% higher than before the pandemic.

RBA Decision

  • Three of the four major banks expect the RBA to delay QE tapering.

Chris Joye on QE

  • Commonwealth bond issuance has roughly halved since QE was announced, meaning the RBA is purchasing around double the new issuance amounts per week.
  • This contrasts to the UK for example, which is purchasing roughly one for one of new issuance.
  • It means the RBA is buying a larger share of the total bonds than initially planned.
  • Since QE started, ADIs have sold $76 billion of government bonds, which reduces the impacts of QE.
  • Regulation requiring ADIs to hold capital against these bonds and higher swap costs has disincentivised ADIs from holding them. Instead, they have preferred to hold them in ES accounts earning 0.

Josh Stewart

Associate - Money Markets