Daily Commentary BY THE CURVE TEAM –

Focus on Victoria

7th of June, 2021

Covid in Victoria remains the biggest factor for the economy in the short run.

Last week there were a raft of data updates, including Q1 GDP which showed that Australia had completed its recovery from covid. GDP, as well as other data updates for previous months, were extremely encouraging but are backward looking.

Victoria is currently in lockdown. Today another 9 cases were recorded, meaning an early end to the lockdown seems unlikely.

This will hamper economic indicators, just when Australia seemed to be surging. It also comes prior to the RBA’s July meeting, where they will decide whether to extend QE and Yield Curve Control.

Over the weekend there were reports that QE would be extended, but the weekly purchase amounts will be more flexible than the $5 billion a week. This would leave scope for the RBA to increase their purchases when they deem it necessary, but also reduce purchases.

They would still have a cap on the total additional purchases that can be made.

This week, job ads for May are released. Business conditions and confidence for May are released tomorrow.

Consumer confidence for June is released on Wednesday, which may give an insight in to the effect lockdowns are having.

Josh Stewart

Associate - Money Markets