Australia Briefing: RBA Takes Election Center Stage

(Bloomberg) --

Good morning and welcome back, it’s Ainsley here and this is what you need to know to kick off your week.

Tough Call: Will they, won’t they? Central bank officials face a political challenge on whether to raise interest rates in the middle of a highly charged election campaign or hold off until June and take the possible criticism for ducking the call. An overwhelming majority of economists expect the Reserve Bank will hike for the first time since 2010 at tomorrow’s meeting: most see a 15 basis-point move to 0.25%, as do money markets; a few reckon it’ll be a super-sized 40 basis points. 

Year of Hikes: Speaking of the RBA, the Australian Retirement Trust expects it to hike interest rates for the rest of this year as consumer cost pressures are likely to remain elevated. The fund’s Chief Economist Brian Parker sees the central bank lifting rates by 25 basis points at each meeting.

Luring Voters: The Labor Party launched its election campaign yesterday, wooing voters ahead of the May 21 ballot with a suite of new policies on electric vehicles, housing and health care, including a plan to build a network of EV charging stations.

Qantas Challenge: Delta Air and tiny Australian regional carrier Rex are teaming up to access each other’s networks, a partnership coup for the diminutive Sydney-based carrier as it tries to establish itself as a rival to Qantas.  A tie up with Delta gives branding muscle to Rex’s new strategy of flying busy Australian routes dominated by Qantas. 

What Happened Overnight

Sage Advice: As war broke out in Europe and U.S. inflation soared, Berkshire Hathaway’s Warren Buffett went on his biggest stock buying spree for at least a decade. He and his deputies dug deeper into the U.S. stock market and expanded the conglomerate’s stakes in Chevron  and Activision Blizzard.

Ukraine latest: About 100 civilians have been evacuated from the Azovstal steel plant in Mariupol so far, President Volodymyr Zelenskiy said. U.S. House Speaker Nancy Pelosi and Democratic lawmakers met with Zelenskiy in a previously unannounced visit to Kyiv.

End of Easy: The global shift away from easy money is poised to accelerate as a pandemic bond-buying blitz by central banks swings into reverse, threatening another shock to the world’s economies and financial markets. Bloomberg Economics estimates that policy makers in the G-7 countries will shrink their balance sheets by about $410 billion in the remainder of 2022.

Evasive Omicron:  New omicron sublineages show an ability to evade antibodies from earlier infection and vaccination, a South African laboratory study has found. Meanwhile in China, Beijing will close gyms and cinemas over the Labor Day holiday and Shanghai will keep virus measures in place despite falling cases.

What to Watch

• CoreLogic April house price data are due, with Bloomberg Economics saying property prices most likely rose, but the pace of gains will have slowed markedly
• The S&P Global Australia manufacturing PMI is also due

One More Thing…

Ape Frenzy: Yuga Labs, the creator of the Bored Apes Yacht Club collection of NFTs, launched a sale Saturday of virtual land related to its metaverse project, raising about $320 million worth of cryptocurrency in the largest offering of its kind. Demand was so strong that activity related to the event caused ripple effects across the entire Ethereum blockchain, disrupting activity and sending transaction fees soaring. 

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