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Published on: Monday, December 19, 2016

  • The Turnbull government said Australians should expect weak wages growth and a softening economy will cause fresh deterioration in the budget outlook. According to the Australian Financial Review, some analysts have said the budget outlook could further deteriorate by as much as $18 billion over four years. As forecast in the May Budget, the deficit for 2016-17 is expected to come in at around $37 billion. The mid-year economic and fiscal outlook (MYEFO) is due to be released at midday. Read more about the implications of MYEFO in Peter’s article today.
  • This week, the auction clearance rate across the combined capital cities fell to 70.5% from last week’s 71.6%. According to research house CoreLogic, auction volumes are continuing their seasonal taper, with the number of reported properties taken to auction across the capital cities at 2,722 – down from last week’s 3,432. Melbourne’s preliminary clearance rate fell to 75.7% this week from 78.4% last week, while Sydney’s preliminary clearance rate increased slightly to 74.1% from 73.7%. 
  • Key Federal Reserve officials have talked up the prospect of several rate hikes over 2017. US Richmond Fed President, Jeffrey Lacker, said the Fed may need to raise more than three times next year, and faces challenges in gradually cooling off the economy. Federal Reserve Bank of St. Louis President, James Bullard, told the Wall Street Journal that the central bank should consider reducing its balance sheet next year. Bullard also said more than one rate hike might be needed. 
  • Mid-tier banks say the home loan market is behaving more rationally since the major lenders stopped their extreme price discounting. A survey by The Australian found that the chiefs of Bendigo and Adelaide Bank, Bank of Queensland, CUA and Liberty Financial said heavy discounting from the Big Four ended after heavily denting their profits. The bank leaders also expressed doubts over expectations that the RBA’s rate cutting cycle was over. “… I think we will actually see the cash rate remaining netural in 2017,” chief of CUA, Rob Goudswaard said. 
  • At 0645 AEDT on Monday, the local SPI 200 futures contract was down four points, or 0.07 per cent, at 5,489 points.


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