Daily Commentary BY THE CURVE TEAM –

Events Coming to a Head

23rd of October, 2020

By the end of this year there should more clarity on the economic environment.

Uncertainty has dominated much of this year. Covid-19 has been the colossal instigator, which has prompted uncertainty about monetary and fiscal policy. In addition, there has been geopolitical tension, all of which has made the environment for consumers to spend and businesses to invest far from accommodating.

Over the next few months leading to the end of the year, there should be more certainty about the political, fiscal and monetary environment. Already the Australian federal budget boosted consumer confidence with its expansionary mandate, whereas prior to the budget the uncertainty of the policies was probably dragging on activity. The hope will be that more resolutions and announcements like these will also foster more certainty and therefore activity.

In Australia, the RBA are expected to announce further easing measures by the end of the year. At the moment there is still some doubt, so an announcement will provide a much clearer mandate for banks especially to work within.

In the US, the presidential election will be decided within two weeks. This will likely prompt a stimulus package if it isn’t arrange before the election, and will allow businesses to plan according to either Trump or Biden’s policy preferences.

Britain and the EU will have reached a trade deal come December 31. Fish and oversight on subsidising industries remain the only major hurdles to overcome to reach a trade deal.

For all the above, the best outcome is subjective. Objectively though, certainty will at least provide a stable environment for consumers and businesses to operate within.

Covid-19 will continue to murk the outlook and wane on confidence. If a vaccine can be found early to mid next year as the Australian government is expecting, then optimism will grow even further.



Josh Stewart

Client Relationship Managers