The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Wednesday, January 25, 2012

Market positioning for very low core inflation result...

At this stage, I think a "surprise" will be anything equal to or less than 0.2% (ie, more than one standard deviation away from the consensus view of 0.5%). Even then, the market is really positioning for a low number, so it might not move huge. The upside is more complex. A "surprise" would certainly be 0.7% or higher, because nobody is expecting it. However, the price action will be in the interbank futures and OIS contracts, and less so in the 3 year government bonds given the structural demand for those contracts, as witnessed during 2011. That is, even with a high number I don't think many will have the balls to short Aussie bonds this far out from an RBA meeting. Having said that, the global theme is risk-on.
at 10:41 AM