Daily Commentary BY THE CURVE TEAM –

Data Stalls, Election Result Drags On

5th of November, 2020

The dichotomy in the data continues while offshore the Election result is still not clear.

Earlier in the week ahead of the RBA we had a couple of solid data points from the housing market. Low rates are spurring a pick up in new lending while fiscal policy measures are supporting a pick up in building approvals.

On the flip side the inflation data was quite weak, something that was on display in yesterday’s retail data.

Retail sales data slipped again, falling for the second straight month in September. After a robust rise on the back of stimulus payments and super withdrawals as most of Australia emerged from lockdown, sales have faltered the last two months.

In September sales were down 1.1% adding to the 4% decline the previous month. Sales were only down 2% for the quarter with the July data still benefiting from stimulus tailwinds. For the quarter though, sales adjusted for inflation were actually up, with volumes climbing 6.5%.

Also out yesterday was the high frequency labour market data which points to a continues flatlining in the recovery of lost jobs during the depths of the pandemic. It is clear that the new classifications for JobKeeper are having an impact on some industries. It also supports the forecasts from the RBA and Treasury that we are yet to see the peak for the unemployment rate in this cycle.

Offshore and at the time of writing the outcome of the US election is still not clear. It what has been nothing short of a rollercoaster 24 hours, with the outcome swinging backwards and forwards, it now looks as if we will have a new President in the coming days.

It is still unclear what that will mean for markets where equally wild swings have been seen in recent days. While equity markets haver been effected to a lesser extend, the USD and Bond markets have been quite volatile.

David Flanagan

Director - Interest Rate Markets