Daily Commentary BY THE CURVE TEAM –

Uncertainty Reduces

9th of November, 2020

The US election result and continuing positive news on Covid-19 cases should reduce uncertainty for the outlook.

Last week’s RBA decision provided more clarity on the interest rate outlook after two months of speculating on the RBA’s next move. This has been followed up by the US election result that was confirmed over the weekend.

Joe Biden has been confirmed as the president over the weekend. Although Trump will be reluctant to leave without a fight, the result appears unambiguous.

This will allow US policy to begin with a clear direction, rather than businesses and consumers being unsure of who their president would be. Key policy focuses under Biden will be corporate tax levels, which Biden has indicated he would increase, as well as his approach to China. Trump was particularly hard-line on China, so it will be interesting to see if Biden is more lax in his approach.

Domestically, Victoria continues its recovery from Covid-19, recording its tenth day of no new cases. Such improvements are crucial to Australia’s economic recovery and to meet the updated RBA forecasts announced last week, which has unemployment peaking at around 8% rather than their initial prediction of 10%.

On Tuesday business conditions and confidence will be released for October, which was the first month JobKeeper payments were amended. Consumer confidence will also be released for October on Wednesday.

Governor Lowe will deliver a speech on Friday, which will be of interest as it is the first speech following the change in stance last week.

Josh Stewart

Associate- Money Markets