News
Wealth Pi Fortnightly Economic Snapshot
Interest Rates
Interest Rates Outlook Update: The RBA Rate Tracker, based on ASX 30 Day Interbank Cash Rate Futures, provides market expectations of changes to the Reserve Bank of Australia’s cash rate. As of September 30, 2024, the indicator shows a 19% probability of a rate cut to 4.10% at the November RBA meeting, reflecting market sentiment on potential interest rate changes.
Interest Rates Outlook Update
RBA Monetary Policy: The Reserve Bank of Australia decided to keep the cash rate unchanged at 4.35% on 24 September 2024, citing persistent inflation, which remains above target. While inflation has eased since 2022, it is not expected to return to the 2-3% target range until 2025-2026. The RBA emphasized the need for restrictive monetary policy to control inflation amid uncertain economic conditions both domestically and globally.
Big week of economic data
Monday
- Provisional Mortality Statistics: As of the latest update, deaths in Australia in the early weeks of 2024 have seen a slight decrease compared to previous years. Death rates have generally been lower across most age groups, with notable reductions in deaths due to COVID-19 and other respiratory diseases. The data shows a continued decline in mortality as compared to 2023 and 2022.
Tuesday
- Federal Reserve Chairman Jerome Powell’s speech: Jerome Powell spoke on U.S. inflation and monetary policy, emphasizing that further rate hikes may be necessary to ensure inflation returns to 2% target level. He noted that the U.S. economy remains strong but expressed caution regarding inflationary pressures.
- ABS Releases:
- Building Approvals: Building approvals in Australia fell sharply in August 2024, indicating a continued slowdown in the construction sector, especially in multi-unit dwellings.
- Retail Trade: Retail sales remained flat in August, showing signs of weakening consumer spending.
Wednesday
- US ISM Manufacturing PMI: The ISM manufacturing PMI for September 2024 came in at 47.2, which is lower than expected, reflecting continued contraction in U.S. manufacturing due to reduced demand and persistent inflationary pressures.
- US Job Openings: JOLTS showed a slight decrease, with the number of job openings falling to 7.64 million in September from 7.67 million in August, signaling a gradual cooling in the labor market.
Thursday
- ABS Release – International Trade in Goods: Australia’s international trade surplus expanded by $584 million in July 2024, driven by a 0.7% increase in exports and a 0.8% decrease in imports, with fuels and lubricants leading the decline.
Friday
- ABS Releases:
- Lending Indicators: Lending for housing dropped, reflecting the ongoing impact of higher interest rates on borrowing demand.
- Monthly Household Spending Indicator: Household spending growth slowed further, with declines in discretionary spending.
- US Non-Farm Employment Change: In September 2024, the U.S. added 142,000 jobs, which was below expectations but still indicates some job growth. The healthcare and professional services sectors were the main drivers of this increase, while other areas such as manufacturing and construction experienced declines
- US Unemployment Rate: The unemployment rate declined slightly to 4.2% in September, down from 4.3% in August. This decrease signals a moderate easing in labor market conditions, with more people seeking jobs while hiring slows
Property
National housing values increased by 0.4% in September 2024, with quarterly growth slowing to 1.0%, the lowest since March 2023. While cities like Perth and Adelaide saw continued growth, Melbourne, Canberra, Hobart, and Darwin experienced declines. The increase in new listings and weaker selling conditions, including longer selling times and lower auction clearance rates, signal a softening market. Affordability challenges are supporting stronger demand in lower-priced housing segments, with unit values outpacing house values in most capitals.
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