Monthly Insights BY THE CURVE TEAM –

With over 100 years of collective financial markets experience behind us, we have created Curve’s monthly insights, highlighting important global economic data and providing in-depth analysis to help you better understand the current economic climate.

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Optimism Dominates the Outlook

  • Two key government programs – JobKeeper and HomeBuilder ended as of March 31.
  • The economy is expected to hold up in spite of this.
  • Employment in particular continues to overdeliver, with the economy having regained all the jobs lost during Covid.
  • Other variables, namely dwelling approvals and lending may face headwinds ahead.
  • More consequential will be where these levels normalise, as this will indicate what economic activity is sustainable.

Optimism Dominates the Outlook

  • Economic data continues to show a resurgence in economic activity.
  • Q4 GDP growth headlined a run of strong data releases over the month.
  • Upside and downside scenarios for the economy remain disparate, although the downside is looking increasingly unlikely.
  • Optimism must be tempered with the fact the economy remains in a recovery phase.
  • The prospect of an economic expansion over the medium and long term appears very viable, but there is no guarantee high growth rates can be sustained beyond the recovery


RBA Doubles Down as Transition Approaches

  • The economic recovery has continued strongly despite some hiccups with Covid lockdowns.
  • A transition from government led growth back to consumers and businesses will begin in the middle of the year.
  • Plentiful cheap funding from the RBA and high levels of household savings provides an impetus for business and consumer led growth, but it is not guaranteed.
  • Although the outlook is much improved, there is still uncertainty with Covid.

Economic Resurgence Underway

  • Three different vaccines for Covid-19 showed very encouraging results, which means Australia will likely begin rolling out vaccines from the beginning of next year.
  • GDP for Q3 and employment data for October were very strong.
  • Victoria’s re-opening continues to offer an immediate upside to the economy.
  • The RBA made no change to monetary policy and continue referring to an uneven and drawn-out recovery

Economic Recovery Hinges on Consumption

  • As was widely expected the RBA pulled multiple levers at the November meeting to ease overall monetary conditions.
  • The actions from the RBA has flattened the yield curve but has failed to have an impact on the currency.
  • In their Quarterly Statement on Monetary Policy the RBA upgraded their near-term outlook but remains concerned about the medium term.
  • Their forecasts hinge on consumer behaviour and hope that consumers will ramp up spending as the economy re-opens.

Lingering Uncertainty A Threat to the Recovery

  • The government finally delivered a budget update full of incentives but light on spending.
  • More monetary policy is expected to compliment the latest fiscal policy announcements.
  • A lift in confidence from businesses and households is needed for the current monetary and fiscal settings to have their full effect.
  • However there are a number of uncertainties that pose a significant threat to the outlook and the recovery that is expected to be “bumpy and uneven”.