Markets Overview

  • ASX SPI 200 futures down 1.3% to 6,478.00
  • Dow Average down 1.6% to 29,590.41
  • Aussie down 1.9% to 0.6517 per US$
  • U.S. 10-year yield fell 2.6bps to 3.6846%
  • Australia 3-year bond yield rose 27 bps to 3.59%
  • Australia 10-year bond yield rose 25 bps to 3.91%
  • Gold spot down 1.6% to $1,643.94
  • Brent futures down 4.8% to $86.15/bbl

Economic Events

The Reserve Bank of Australia continued its rapid rate hikes, despite reiterating it “is not on a pre-set path.” Households are yet to feel the impact of raising rates by 225 basis points over five months. With monetary policy now on the restrictive side of neutral the RBA is close to reaching the point at which tightening slows, enabling time to assess the effects of earlier hikes on the economy.

Further tightening is likely to be measured and data-dependent, in Bloombergs view. Markets have priced in aggressive tightening, with the cash rate rising above 3.8% by 2Q23. Bloomberg see the economy as being unable to handle, and does not require, such a rapid tightening. Bloomberg expect 25-bp hikes in October and November, with a 15-bp hike in December taking the cash-rate target to a peak of 3%.

Other News

On the run from authorities after forcing a bank to release her family savings at gunpoint to treat her cancer-stricken sister, 28-year-old Lebanese interior designer Sali Hafiz insists she is not the criminal.

“We are in the country of mafias. If you are not a wolf, the wolves will eat you,” she told Reuters, standing on a dirt track somewhere in Lebanon’s rugged eastern Bekaa valley where she has since been in hiding.

Hafiz held up a Beirut branch of BLOM Bank last week, taking by force some $13,000 in savings in her sister’s account frozen by capital controls that were imposed overnight by commercial banks in 2019 but never made legal via legislation.

Dramatic footage of the incident, in which she cocks what later turned out to be a toy gun and stands atop a desk bossing around employees who hand her wads of cash, turned her into an instant folk hero in a country where hundreds of thousands of people are locked out of their savings.

A growing number are taking matters into their own hands, exasperated by a three-year financial implosion that authorities have left to fester – leading the World Bank to describe it as “orchestrated by the country’s elite”.

Hafiz was the first of at least seven savers who held up banks last week, prompting banks to shut their doors citing security concerns, and call for security support from the government.

George Haj of the bank employees syndicate said the holdups were misguiding anger that should be directed at the Lebanese state, which was most to blame for the crisis, and noted some 6,000 bank employees had lost their jobs since it began.

Authorities have condemned the holdups and say they are preparing a security plan for banks.

But depositors argue that bank owners and shareholders have enriched themselves by getting high interest payments for lending the government depositors’ money and are prioritising the banks over people rather than enacting an IMF rescue plan.

The government says it is working hard to implement IMF reforms and aims to secure a $3 billion bailout this year.