Rating agency Moody's has issued a timely warning saying that Australia's debt to GDP ratio is likely to climb further to about 38% of the GDP in 2018 in the wake of falling commodity prices which makes the Treasurer's spending measures in a typical election year budget difficult unless revenue measures including higher taxes are put in place. That itself will be politically problematic with the Turnbull Government losing its momentum with no new economic policies announced. The talk on possible GST increase, changes to capital gains tax and superannuation did not last a coffee table session and the policy drought perhaps reflected in the current newspolls confirming that the Turnbull honeymoon is well and truly over and the two main parties running pretty much at par. A credit downgrade will be politically disastrous with huge impact on cost of funds - so all eyes will be on the Treasurer Scott Morrison and his maiden budget on 3 May before the elections.
AUSSIE DOLLAR STRENGTHENS FURTHER
The AUD marched past US 77 cents mainly on the news of commodity prices strengthening, but we still believe that the Dollar will retreat and settle below 74 cents. Oil prices are set to tumble with news coming from overnight that Saudi Arabia could not reach an agreement with Iran on production levels. The Aussie march against the USD has also been helped by the US Fed clearly stating that any prospect of a US rate rise will depend on its view of the international economy.
MARKET DATA
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) "Iron Ore 60% MBIOI-IR index USD/t (Updated Wednesday)" | As at 15-Apr 2.00 2.28 2.55 1.75 0.7711 0.6850 84.51 5.0004 5157 2080 17897 3078 43.10 1233.99 54.50 | 8-Apr 2.00 2.25 2.40 1.72 0.7535 0.6627 81.91 4.8823 4937 2047.6 17576 2984 41.94 1240.69 52.19 |
RSS Feed