Virus fears, rate uncertainty push $A to worst January since 2015

Original article by Timothy Moore
The Australian Financial Review – Page: 20 : 3-Feb-20

The Australian dollar has shed 4.7 per cent so far in 2020, and factors such as the coronavirus and the prospect of further interest rate cuts could see the currency test a new post-global financial crisis low. The Reserve Bank of Australia is now widely tipped to reduce the cash rate in April, although Prashant Newnaha of TD Securities says a rate cut in March is still possible. The RBA is expected to downgrade its economic growth forecasts on 7 February, and National Australia Bank economist Kaixin Owyong says this means that further rate cuts will be necessary.

CORPORATES
RESERVE BANK OF AUSTRALIA, TD SECURITIES, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Consensus shifts to April cut after NAB relents

Original article by Sarah Turner
The Australian Financial Review – Page: 30 : 31-Jan-20

The futures market is currently pricing in a 10.4 per cent chance that the Reserve Bank of Australia will reduce the cash rate on 4 February, compared with a 53 per cent chance in mid-January. National Australia Bank’s chief economist Alan Oster previously expected a rate cut in February, and while he still believes that the RBA should so, he says the next rate cut is now likely to be in April. The other major banks also expect an official interest rate cut in April.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA

Rate cut odds sink with jobless fall

Original article by Adam Creighton
The Australian – Page: 2 : 24-Jan-20

Official data shows that Australia’s unemployment rate fell to 5.1 per cent in December, its lowest level since April. The economy shed 300 full-time jobs, although this was offset by the creation of 29,200 part-time jobs. The underemployment rate was steady at 8.3 per cent; the Australian Bureau of Statistics’ chief economist Bruce Hockman notes that underemployment has remained unchanged over the last year. Financial markets have responded to the latest jobs data by pricing in a 25 per cent chance that the Reserve Bank will reduce the cash rate in February.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA

Rate cuts not working says CBA economist

Original article by Sarah Turner
The Australian Financial Review – Page: 27 : 22-Jan-20

National Australia Bank’s chief economist Alan Oster says the Reserve Bank needs to reduce official interest rates twice in 2020 in order to stimulate the economy. He expects the first rate cut to be in February. The Commonwealth Bank’s chief economist Michael Blythe also anticipates a rate cut in February, although he opposes such a move. Blythe contends that the three rate cuts in 2019 have not been effective, and they have resulted in outcomes such as a decline in consumer confidence.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

RBA warns on buy now, pay later dangers

Original article by Gerard Cockburn
The Australian – Page: 14 : 16-Jan-20

Documents released under Freedom of Information laws shows that the Reserve Bank of Australia had expressed concern about the growth of ‘buy now, pay later’ platforms in March 2019. The internal memorandum cautioned that the rapid growth in such platforms is beginning to present a risk to financial stability, and noted that some consumers may not fully understand the risks associated with these platforms. However, the central bank also concluded that buy now, pay later services can be more beneficial to some consumers than credit cards.

CORPORATES
RESERVE BANK OF AUSTRALIA, AFTERPAY LIMITED – ASX APT, ZIP CO LIMITED – ASX Z1P, GOLDMAN SACHS AUSTRALIA PTY LTD

US rates likely to stay on hold, Fed indicates

Original article by James Dean
The Australian – Page: 14 : 6-Jan-20

The minutes of the Federal Reserve’s December meeting show that the US central bank expects official interest rates to remain unchanged for some time, although this is likely to depend on the economic outlook. Some Federal Reserve officials expressed concern that an extended low interest rate environment may encourage ‘excessive risk-taking’. Meanwhile, former Federal Reserve chairman contends that the central bank has options other than quantitative easing and forward guidance to stimulate the economy in the event of a downturn.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD

Australia’s economic interests at risk with RBA out of ammunition

Original article by John Kehoe
The Australian Financial Review – Page: 2 : 21-Dec-19

Paul Brennan of Citigroup notes that the Reserve Bank of Australia’s average cumulative interest rate cut in the last four monetary policy easing cycles was three percentage points. With the cash rate already at a record low of 0.75 following three rate cuts since June, experts warn that the RBA has limited ‘firepower’ in the event of an economic downturn. RBA governor Philip Lowe has ruled out negative interest rates; while he is open to quantitative easing, his preference is for fiscal stimulus and structural reform.

CORPORATES
RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY

RBA to wait and see before February rate cut

Original article by David Rogers
The Australian – Page: 18 : 18-Dec-19

Financial markets have priced in a 62 per cent of an official interest rate cut in February, following the release of the federal government’s Mid-Year Economic and Fiscal Outlook. The minutes from the central bank’s latest board meeting indicate that it will assess the economic outlook before deciding whether to make any change to monetary policy at its first meeting for 2020. The minutes noted that some downside risks to the global economic outlook have receded in recent weeks.

CORPORATES
RESERVE BANK OF AUSTRALIA

Banks struggle despite RBNZ retreat: analysts

Original article by Cliona O’Dowd
The Australian – Page: 20 : 9-Dec-19

Jonathan Mott of UBS says the outlook for Australia’s banks remains "very challenging", despite the fact that they will be treated more favourably than expected under the Reserve Bank of New Zealand’s new capital requirements. The central bank will phase in the new capital rules over a longer time-frame, while the banks will able to hold a wider range of securities as tier-one capital. Several analysts expect the new capital rules to result in the banks receiving lower dividend payouts from their New Zealand subsidiaries.

CORPORATES
RESERVE BANK OF NEW ZEALAND, UBS HOLDINGS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, CITIGROUP PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED

Banks boosted as Kiwis cave in

Original article by Richard Gluyas
The Australian – Page: 17 & 21 : 6-Dec-19

The Reserve Bank of New Zealand will require the local subsidiaries of Australia’s four major banks to hold tier one capital that is equivalent to at least 16 per cent of their risk-weighted assets. They will also be required to hold total capital of 18 per cent, of which 13.5 per cent will have to be common equity tier one capital. However, the new rules will be implemented over a seven-year period, rather than the five-year time-frame that was initially proposed.

CORPORATES
RESERVE BANK OF NEW ZEALAND, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, UBS HOLDINGS PTY LTD, S&P GLOBAL RATINGS