– AUGUST 2021 INSIGHTS BY THE CURVE TEAM –
- The RBA stuck to its plan to slightly taper QE purchases by September.
- Forecasts in the Statement on Monetary Policy for August largely showed a more optimistic outlook compared to May despite the recent lockdowns.
- Market pricing for the RBA raising the cash rate was volatile over the month. Markets anticipated a backtrack on QE tapering due to lockdowns, only for the RBA to stick to its tapering plan.
- Lockdowns and swathes of liquidity continued to weigh on rates, despite expectations that rates would begin to rise post TFF.
- The reality of lower rates for longer needs to become a central focal point of investment strategies.
- A bar bell approach presents a risk adjusted way to increase portfolio yield.
- Lockdowns remain the key variable for economic updates.
- Delayed releases show the economy was still strong up until June but signs of weakness began to show when lockdowns commenced in July.