AUSTRALIA DATA: No Productivity Growth In 2024, ULC Turn Higher In Q4
Mar-05 03:51
Q4 productivity growth was not as bad as the RBA was expecting but it still fell for the third consecutive quarter to be down 1.2% y/y, a deterioration from Q3’s -0.6% y/y. Today RBA Deputy Governor Hauser identified productivity growth as the key issue. Monetary policy cannot do anything about it and can only react to it. He also said it may be the reason why wage growth is slowing despite the strong labour market.
- The RBA forecast productivity to fall 1.9% y/y in Q4 and it has it improving to+0.7% y/y in Q4 2025 and reaching its historical average in H1 2026, but it has consistently revised down its expectations. While it is a long-term concept, its weak performance could result in less monetary easing.
- Hours worked continued to outpace GDP growth rising 0.7% q/q in Q4, the fourth consecutive rise. In 2024, they were 1% above 2023 resulting in no improvement in productivity over the year.
- With productivity growth falling 1.2% y/y in Q4, then wage growth consistent with inflation at the RBA’s band mid-point of 2.5% is only 1.3% compared with Q4’s WPI at 3.2% y/y, assuming productivity continues to contract at around the same rate as the end of 2024.
- Unit labour costs (ULC) rose 1.6% q/q to be up 4.7% y/y tentatively implying that the moderation in ULC’s has stalled as the recent trough was 4.5% in Q3. ULC growth eased to 5.1% in 2024 from 6.6% but remains well above the 2.8% series average.
Australia productivity vs ULC y/y%
Source: MNI - Market News/ABS
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GOLD: Gold Declines on Tariff Headlines.
Feb-03 03:42
- Gold started this week with a weakening bias, off from Friday’s close of US$2,798.41 to be at $2,772.75 in afternoon trading.
- Last week saw an amazing turnaround from gold to finish 1.00% better for the week after a very poor day, Monday and this week, Gold is showing it doesn’t like Mondays again down -0.90%.
- Whilst gold’s ‘safe haven’ status usually prevails, a strengthening USD on the back of tariff news won over sending gold lower this morning.
- The US announced 25% tariffs on goods from Mexico and Canada, and 10% from China coming into effect from Tuesday.
- The potential for a global trade war is now real and in any period of uncertainty the USD strengthens and already has moved by enough to offset gold’s safe haven status.
- That said, gold started 2025 where it left off last year, performing well and up over 5% year to date.
- JPMorgan announced that it plans to deliver US$4bn of gold bullion this month against contracts that expire in February, representing one of the largest physical settlements on record.
FOREX: Leveraged Funds Add To AUD & NZD Shorts
Feb-03 03:12
Leveraged funds added to AUD and NZD shorts last week and cut back on GBP longs, per the CFTC positioning update. This data is for the week ending Tuesday the 28th of January. The table below presents the weekly positioning change and outright position by currency and investors type.
- In terms of contracts, leveraged investors added just over 13k in terms of AUD shorts. This puts outright shorts to -44.2k, which is the largest short since early 2022. For NZD, leveraged shorts are their largest since late 2019.
- GBP longs were cut by leveraged investors, down by 13k.
- For EUR and JPY, we saw both leveraged and asset manager investors add to positions in both currencies. For yen this came after the BoJ hike, although both investor types are still short in an outright sense.
- The broader asset manager bias is for long USD positions, albeit not against the EUR.
Table 1: CFTC Positioning Update By Currency & Investor Type
| Leveraged Contracts | Asset manager Contracts | |||
| Weekly Change | Outright Position | Weekly Change | Outright Position | |
| JPY | 5461 | -34175 | 11394 | -1813 |
| EUR | 938 | -34296 | 13518 | 174396 |
| GBP | -13120 | 19928 | -5279 | -69610 |
| AUD | -7622 | -44281 | 141 | -42405 |
| NZD | -4194 | -17935 | 3327 | -36716 |
| CAD | 8426 | -83946 | -6826 | -139704 |
| CHF | -3240 | -15169 | -2960 | -40551 |
| MXN | 1081 | -15631 | 6513 | 10179 |
Source: CFTC/MNI - Market/Bloomberg
US TSYS: Tsys Futures Off Session Lows, Curve Flattens
Feb-03 03:10
- Tsys futures are off session lows now with just the TU contract trading lower on the day, last -00⅛ at 102-25⅞, while TY is +12 at 109-07+
- a bullish corrective cycle remains intact and the TY contract is holding on to its recent gains. 109-11, the 50-day EMA, remains exposed. It has been pierced, a clear break of it would strengthen a bullish theme and open 109-31, the Dec 18 high. The medium-term trend condition is bearish. The bear trigger is 107-06, the Jan 13 low. Initial firm support has been defined at 108-06, the Jan 23 low.
- The 2yr yield rose 7bps earlier, and now trade just 3.5bps higher at 4.232%, while the 10yr is -4bps at 4.498%, just above the ytd lows of 4.486%.
- The 2s10s curve has dropped 7.5bps to 26bps having now erased all the steepening made this year, while teh 2s30s is -8.5bps at 50bps.
