– SEPTEMBER 2021 INSIGHTS BY THE CURVE TEAM –
- QE was extended to February at the rate of $4 billion of purchases a week
- The August meeting minutes acknowledged the limited benefit of further monetary policy easing during lockdowns. This signals the RBA will likely maintain or reduce further QE purchases rather than increasing them.
- APRA ended the use of the CLF by the end of 2022, which will have implications for bond yields.
- There were a range of primary bond issues over the month, including by a major bank, regional bank and semi government entity.
- The CLF changes will put downward pressure on government bond yields over 2022 even as QE is tapered and should increase yields on non-government bonds.
- Dollar Cost Averaging, and Averaging In are strategies to consider in a rising interest rate environment.
- Data over the last month continued to paint the picture of an economy doing well ahead of lockdowns with GDP coming in ahead of expectations and employment holding up well.
- However the impact of lockdowns is showing up in more recent data points with business and consumer confidence down along with retail sales.