Daily Commentary BY THE CURVE TEAM –

Updates Ahead

4th of January, 2021

The start of 2021 will likely be mired by the same themes that concluded 2020.

Covid-19 case numbers will continue to be monitored closely, especially in NSW and Victoria. NSW has been recording single digit case numbers recently, but a cluster in the south west of Sydney is of concern.

Victoria has also recorded a handful of cases linked to Sydney. In response, states have closed their border to Sydney, the northern beaches section of NSW has been put into lockdown and numerous individuals have been forced to self-isolate.

This will likely have taken at least a slight hit on economic growth in what is usually a time of big consumer spending. Countering this though will be the continued re-emergence of Victoria, despite the recent case numbers.

The effects of the covid cases will likely not flow through to data updates straight away. Rather, over the coming months as data updates arrive we should expect, especially domestic economic data, to be less positive than at the conclusion of last year.

Examples of this should be seen this week, with building approvals and the trade balance for November released on Thursday. Given the data is from November, recent updates will not impact.

When data updates for December and January are released, we should start to see the effects from recent covid cases.

Josh Stewart

Associate - Money Markets