Summary



Politically, the Budget has been reasonably well received;
There has been greater debate about the economics;
The Budget is likely to be a modest plus for the economy this financial year.
Risks to key financial market variables.
Variable
Direction of risk
6 months
Cash rate
Comment
We got the second rate move. The chances of additional
changes in the second half of the year will come down to
the outlook for the domestic unemployment rate, global
financial developments and the level of the currency.
The level of ninety-day bill yields is appropriately priced
for our rate view. But the developments in the current
market will be important.
Three-year swap rate looks a bit high given the domestic
and global economic risks.
Longer-end rates spiked sharply over the past month. But
low global cash rates and inflation will keep the lid on
longer-term rates for some time yet.
The $A has picked up in recent weeks as commodity
prices have firmed. We look for the $A to hit 0.70c over
the next year. The bigger question is still whether the $A
can move under 70c.
90-day bank bills
3-year swap
5-year swap
AUD/USD
Key forecasts
Variable
Cash rate
90-day bank
bills
3-year swap
5-year swap
AUD/USD
Last week
2.00%
2.14%
Current
2.00%
2.13%
End Jun 2015
2.00%
2.20%
End Dec 2015
2.00%
2.30%
End Jun 2016
2.00%
2.50%
End Dec 2016
2.00%
2.75%
2.30%
2.67%
0.7927
2.27%
2.67%
0.8012
2.00%
2.25%
0.77
2.30%
2.50%
0.73
2.50%
2.80%
0.70
2.80%
3.20%
0.70
Pricing as at 10:30am, 18 May 2015
Economic and Financial Market Weekly Monday, 18 May 2015
Bank of Queensland Limited ABN 32 009 656 740 Australian Credit Licence Number 244616 (BOQ). BOQ will not provide you with advice in relation to the establishment,
operation and structure of your self managed superannuation fund (Super Fund). Nor will BOQ provide you with advice in relation to the investment strategy of your Super
Fund. You should seek independent advice from a qualified professional on these matters. Terms and conditions may apply to individual products and services. The
material in this report may contain general advice. This material has been prepared without taking account of your objectives, financial situation or needs. The content of
this report is for information only and is not an offer by Bank of Queensland Limited ABN 32 009 656 740 (BOQ) to provide any products and services. BOQ makes no
representations or warranties about the accuracy or completeness of the content contained in this report. BOQ recommends that you do not rely on the contents of the
report, that you consider the appropriateness of any advice before acting on it and that you obtain independent professional advice about your particular circumstances.
You should obtain and consider the relevant terms and conditions or Product Disclosure Statement (PDS) before making any decision about whether to acquire or
continue to hold any products. All other terms and conditions or PDS and Financial Services Guide (FSG) are available at any BOQ branch.
1
Key economic charts of last week
Growth in the number of housing finance commitments is
particularly soft in WA and SA.
Unsurprisingly, low interest rates means that refinancing
is a key driver of activity in the housing finance market.
The high level of house prices means that first home buyers
are a small part of the market.
One implication of modest national income growth is
modest wages growth.
Wages growth is soft across most industries, with pay rises
over the past year best in recreation.
The low exchange rate is helping boost exporters’
confidence.
Economic and Financial Market Weekly Monday, 18 May 2015
Bank of Queensland Limited ABN 32 009 656 740 Australian Credit Licence Number 244616 (BOQ). BOQ will not provide you with advice in relation to the establishment,
operation and structure of your self managed superannuation fund (Super Fund). Nor will BOQ provide you with advice in relation to the investment strategy of your Super
Fund. You should seek independent advice from a qualified professional on these matters. Terms and conditions may apply to individual products and services. The
material in this report may contain general advice. This material has been prepared without taking account of your objectives, financial situation or needs. The content of
this report is for information only and is not an offer by Bank of Queensland Limited ABN 32 009 656 740 (BOQ) to provide any products and services. BOQ makes no
representations or warranties about the accuracy or completeness of the content contained in this report. BOQ recommends that you do not rely on the contents of the
report, that you consider the appropriateness of any advice before acting on it and that you obtain independent professional advice about your particular circumstances.
You should obtain and consider the relevant terms and conditions or Product Disclosure Statement (PDS) before making any decision about whether to acquire or
continue to hold any products. All other terms and conditions or PDS and Financial Services Guide (FSG) are available at any BOQ branch.
2
Firms are thinking about hiring more people, but labour
market conditions remain soft.
Modest improvement is expected in the Budget deficit
next year.
The Federal Government is playing as a big a role in the
economy as it has for thirty years.
Government investment levels are low, although that
partly reflects the impact of privitisations.
Consumer discretionary and industrial stocks have both
had a good run in the year to date.
Bank share prices this year have been heavily influenced
by changes in interest rates.
Economic and Financial Market Weekly Monday, 18 May 2015
Bank of Queensland Limited ABN 32 009 656 740 Australian Credit Licence Number 244616 (BOQ). BOQ will not provide you with advice in relation to the establishment,
operation and structure of your self managed superannuation fund (Super Fund). Nor will BOQ provide you with advice in relation to the investment strategy of your Super
Fund. You should seek independent advice from a qualified professional on these matters. Terms and conditions may apply to individual products and services. The
material in this report may contain general advice. This material has been prepared without taking account of your objectives, financial situation or needs. The content of
this report is for information only and is not an offer by Bank of Queensland Limited ABN 32 009 656 740 (BOQ) to provide any products and services. BOQ makes no
representations or warranties about the accuracy or completeness of the content contained in this report. BOQ recommends that you do not rely on the contents of the
report, that you consider the appropriateness of any advice before acting on it and that you obtain independent professional advice about your particular circumstances.
You should obtain and consider the relevant terms and conditions or Product Disclosure Statement (PDS) before making any decision about whether to acquire or
continue to hold any products. All other terms and conditions or PDS and Financial Services Guide (FSG) are available at any BOQ branch.
3
Funny quotes
“How many people here have telekinetic powers? Raise my hand?”
Emo Phillips
“My neighbour asked if he could use my lawnmower and I told him of course he
could as long as he did not take it out of my garden.”
Eric Morcombe
“One of the advantages of being disorderly is that one is constantly making exciting
discoveries.”
A.A Milne
“‘Someone complimented me on my driving the other day. They left a note on the
windscreen; it said ‘Parking fine’”
Tommy Cooper
Economic and Financial Market Weekly Monday, 18 May 2015
Bank of Queensland Limited ABN 32 009 656 740 Australian Credit Licence Number 244616 (BOQ). BOQ will not provide you with advice in relation to the establishment,
operation and structure of your self managed superannuation fund (Super Fund). Nor will BOQ provide you with advice in relation to the investment strategy of your Super
Fund. You should seek independent advice from a qualified professional on these matters. Terms and conditions may apply to individual products and services. The
material in this report may contain general advice. This material has been prepared without taking account of your objectives, financial situation or needs. The content of
this report is for information only and is not an offer by Bank of Queensland Limited ABN 32 009 656 740 (BOQ) to provide any products and services. BOQ makes no
representations or warranties about the accuracy or completeness of the content contained in this report. BOQ recommends that you do not rely on the contents of the
report, that you consider the appropriateness of any advice before acting on it and that you obtain independent professional advice about your particular circumstances.
You should obtain and consider the relevant terms and conditions or Product Disclosure Statement (PDS) before making any decision about whether to acquire or
continue to hold any products. All other terms and conditions or PDS and Financial Services Guide (FSG) are available at any BOQ branch.
4
Contact List
Economic and Market Analysis
NSW
Peter Munckton
0439 310 837
[email protected]
Liam Jeffrey
Jimmy MuirMcCarey
David Abbott
07 3212 3865
[email protected]
07 3212 3117
[email protected]
07 3212 3049
[email protected]
NSW
Mark Cozens
0402 853 202
[email protected]
VIC
Nigel Hodgson
0416 180 087
[email protected]
Dale Streten
0419 021 963
[email protected]
Steve Klinakis
0417 658 348
[email protected]
NSW
Lloyd Guy
0467 798 132
[email protected]
VIC
Ray Buxton
0427 049 430
[email protected]
WA
Andrew Opie
0481 008 924
[email protected]
QLD
Mark Sydes
0419 702 569
[email protected]
NSW
Simon Davis
0481 438 212
[email protected]
VIC
Darryn Cahill
0411 080 985
[email protected]
WA
Michael Storer
0438 456 834
[email protected]
Tim Pryor
Gerard (Ged)
Thom
0407 754 535
[email protected]
0477 341 424
[email protected]
Leo Hawker
0418 228 071
[email protected]
07 3212 3510
[email protected]
02 8222 8332
[email protected]
0412 985 837
[email protected]
0414 843 225
[email protected]
Financial Markets
QLD / WA
Trade Finance
QLD
Corporate Banking
Agribusiness
QLD
Business Banking
QLD
Property
NSW
Warren
Bobbermien
Glenn Hilleard
WA
Louis de Klerk
QLD
Private Bank
Mark
Bartholomeusz
Equipment and debtor finance
QLD
Qld
Brendan Casey
0419 755 031
[email protected]
NSW & Vic
Nic Stoneham
0422 157 781
[email protected]
Economic and Financial Market Weekly Monday, 18 May 2015
Bank of Queensland Limited ABN 32 009 656 740 Australian Credit Licence Number 244616 (BOQ). BOQ will not provide you with advice in relation to the establishment,
operation and structure of your self managed superannuation fund (Super Fund). Nor will BOQ provide you with advice in relation to the investment strategy of your Super
Fund. You should seek independent advice from a qualified professional on these matters. Terms and conditions may apply to individual products and services. The
material in this report may contain general advice. This material has been prepared without taking account of your objectives, financial situation or needs. The content of
this report is for information only and is not an offer by Bank of Queensland Limited ABN 32 009 656 740 (BOQ) to provide any products and services. BOQ makes no
representations or warranties about the accuracy or completeness of the content contained in this report. BOQ recommends that you do not rely on the contents of the
report, that you consider the appropriateness of any advice before acting on it and that you obtain independent professional advice about your particular circumstances.
You should obtain and consider the relevant terms and conditions or Product Disclosure Statement (PDS) before making any decision about whether to acquire or
continue to hold any products. All other terms and conditions or PDS and Financial Services Guide (FSG) are available at any BOQ branch.
5