Daily Commentary BY THE CURVE TEAM –

Victoria Eases Restrictions

19th of October, 2020

After over three months of strict lockdowns, Victoria has begun the process of easing lockdown measures.

The new measures will include being able to travel 25km instead of only 5km from home and being able to leave the house for unlimited periods. More consequential for the economy though is businesses will begin to re-open.

Hairdressing is allowed and some exercise facilities will be allowed to re-open. Although it is still a long way off normality, it is at least some positive for an economy that has been reeling for months.

A travel bubble with New Zealand also exists. This should also encourage the movement of people and therefore economic activity.

The RBA minutes for the October meeting will be released on Tuesday. Whether there is any indication of further easing next month will once again be monitored closely.

Reports and opinions continue to emerge of an imminent cut to the cash rate, Term Funding rate and 3-year government bond target, as well as quantitative easing. QE would target 5-10 year government bonds and will be a change in tact from the yield curve control target currently being used for the 3-year government bond.

Also released this week is preliminary retail sales for September. Victoria remained in lockdown all September, so no uplift in sales is expected.

Josh Stewart

Client Relationship Manager