Inflation

[Value Hunter]

And question is why can not Australian get a 20y loan on a fixed term if it is available elsewhere? We..aka RBA sell long term debt/bond.
That would benefit everyone , smooth inflation but i believe it is due to our currency risk and the lack of self funding abilities.
We have billions in super, some supposedly in low risks fixed return.
Would that help inflation, probably a bit but it would also help home owners to sleep better at night

Part of the reason for this is the regulators in Australia are not supportive of having ultra long term fixed loans because it adds systemic risk to the banking system.

The Australian system disperses the risk to millions of homeowners whereas in other countries such as U.S.A, some European countries etc the risk is concentrated into large financial institutions, pension funds etc that buy those 30 year fixed rate mortgage backed securities.

That can cause a buildup of systemic risk in their financial system when too big to fail institutions blow up their balance sheets in a high inflation environment by owning mountains of 30 year fixed rate bonds.

 

[qldfrog]

Part of the reason for this is the regulators in Australia are not supportive of having ultra long term fixed loans because it adds systemic risk to the banking system.

The Australian system disperses the risk to millions of homeowners whereas in other countries such as U.S.A, some European countries etc the risk is concentrated into large financial institutions, pension funds etc that buy those 30 year fixed rate mortgage backed securities.

That can cause a buildup of systemic risk in their financial system when too big to fail institutions blow up their balance sheets in a high inflation environment by owning mountains of 30 year fixed rate bonds.

Here, we have people bankrupted instead

 

[Knobby22]

I went to a (non listed), mining exploration company presentation and the two investment specialists/ founders on the board went through the effects of the economy combined with a detailed exploration of the effects of the Trump Presidency promises plus history of other changes in Presidency through history and they predicted:

Share market will go nowhere for next 6 months.

Inflation will be at least as high and probably greater than the recent peak in 12 months to 2 years away.

Materials and land will be the place to be.

 

[qldfrog]

I went to a (non listed), mining exploration company presentation and the two investment specialists/ founders on the board went through the effects of the economy combined with a detailed exploration of the effects of the Trump Presidency promises plus history of other changes in Presidency through history and they predicted:

Share market will go nowhere for next 6 months.

Inflation will be at least as high and probably greater than the recent peak in 12 months to 2 years away.

Materials and land will be the place to be.

Hum, i actually think market wil go in overdrive, just jump off in time, agree cf inflation so gold land materials hum...who wants IO during a recession? inflation or not
These guys were selling their wares, and will be right in the first few month/year.
I might disagree past 12 months.you did not mention the minerals involved?

 

[Knobby22]

Hum, i actually think market wil go in overdrive, just jump off in time, agree cf inflation so gold land materials hum...who wants IO during a recession? inflation or not
These guys were selling their wares, and will be right in the first few month/year.
I might disagree past 12 months.you did not mention the minerals involved?

I am a seed investor, been going 3 years now.

Niobium, tungsten, copper, uranium. Been pretty exciting

 

[qldfrog]

I am a seed investor, been going 3 years now.

Niobium, tungsten, copper, uranium. Been pretty exciting

Probably better value for excitement than $.just read on asf today something like most if not nearly all of junior miners go nowhere....
But i understand the feeling

 

[sptrawler]

Well it sounds like inflating away the debt, by inflation increasing the tax take, may have come to an end.

Chalmers presides over $49b budget slump, biggest outside the pandemic

The Australian treasurer has admitted the budget will be “a bit weaker” than forecast in May, as Deloitte warns of a record-breaking deterioration in the bottom line.

www.afr.com

 

[over9k]

Meanwhile:

 

[mullokintyre]

A little further analysis ...
The consensus is that Albo will not get a pre election rate cut.

from AFR

The Reserve Bank’s preferred measure of underlying inflation remained stuck above the RBA’s 2 per cent to 3 per cent target band last month, underscoring governor Michele Bullock’s concern about price pressures and keeping interest rate cuts a distant prospect.

Trimmed mean inflation increased to 3.5 per cent in October from 3.2 per cent in September, the Australian Bureau of Statistics said on Wednesday, amid price pressures across a broad range of consumer goods and services.
The uptick in the volatile monthly figures came even as headline inflation remained unchanged at a multi-year low of 2.1 per cent in October.
Headline inflation has fallen sharply over the past few months as households received state and federal government energy rebates, which have caused a record-breaking but temporary 35.6 per cent annual fall in electricity bills.
But Ms Bullock has warned the decline in headline inflation will be short-lived due to the temporary nature of the subsidies, which include a one-year federal government-funded electricity bill discount of $300.

The RBA expects headline inflation to jump back to 3.7 per cent late next year when the federal and state government rebates expire.

With an election due on or before May 17, the Albanese government had hoped a pre-election rate cut would restore its standing with voters, who have turned on the government over its handling of the cost of living.

But expectations have firmed over the past month that rate cuts will come too late.

Several forecasters, including NAB and Westpac, have shifted their forecast for the RBA’s first post-pandemic rate cut to May 20 from February 18, citing the ongoing resilience of the jobs market and a shift in language from the central bank.

The RBA board signalled this month it was highly unlikely to cut the cash rate in either February or April, stating it would want to see a sharp decline in inflation sustained over more than one quarter of data.


After the Australian Bureau of Statistics releases the December quarter consumer price index on January 29, there will not be a second quarterly inflation release available until the RBA’s May 20 meeting.

Deloitte Access Economics on Tuesday released its half-yearly budget monitor report, which projected the federal government would post an underlying deficit of $33.5 billion this financial year, worse than Treasury’s forecast of a $28.3 billion deficit at the May budget.

The shift from a $15.8 billion surplus to a $33.5 billion deficit would represent the sharpest deterioration in government finances on record outside the pandemic.

The deficit will be even deeper should the Albanese government extend its cost-of-living subsidies at the next election, as is widely expected.

 

[mullokintyre]

NZ CB has cut rates by 50bps, and according to New Zealand Herald , its got another 50bps coming up in February.

 

[over9k]

Fed cuts 25, gives forward guidance of only two cuts in 2025. Translation: They're expecting higher inflation for longer, which means higher rates for longer. Far more than markets have been pricing in.

Markets have PLUMMETED in response.

 

[Knobby22]

Fed cuts 25, gives forward guidance of only two cuts in 2025. Translation: They're expecting higher inflation for longer, which means higher rates for longer. Far more than markets have been pricing in.

Markets have PLUMMETED in response.

Tarriffs will create higher inflation.
I don't get why there will be 2 more cuts.

 

[over9k]

I don't get why there will be 2 more cuts.

Politics

 

[over9k]

Tariff revenue may be directed into subsidies, time will tell.

That would be the smart thing to do but when have our leaders ever done anything intelligent?

 

[over9k]

@waterbottle NZ now officially in recession.

C'mon lads, how long until australia follows suit? We've been in a per capita/techincal recession for like 18 months, how long before it becomes undeniable?

 

[over9k]

It's starting.

 

[over9k]

TREND

 

[waterbottle]

Don't time the market etc etc

I still think JPowell will have to continue cutting. Trump does not like high interest rates.

 

[Smurf1976]

Just adding that the US Treasury yield curve is no longer inverted as it was for quite some time.

3 month, 2 year, 5 year, 10 year, 30 year all have progressively higher yield in order.

But if history's any guide, it's when the inversion ends that trouble tends to become undeniably apparent.

 

[divs4ever]

Tariff revenue may be directed into subsidies, time will tell.

That would be the smart thing to do but when have our leaders ever done anything intelligent?

OUR leaders ?

hmmm not for a while that i remember , but then i have largely tuned out to their utterings and rantings

time will tell if Trump can deliver even half of what he is promising ( there are still a lot of entrenched politicians in both houses )