Recent RBA information releases

Discussion in 'Markets & Economies' started by mmm....shiney!, Jul 22, 2020.

  1. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Balance sheet:

    Screen Shot 2020-07-22 at 9.05.48 am.png

    On the three-year target yield:

    On bond purchases:

    Screen Shot 2020-07-22 at 9.12.47 am.png

    Then Lowe goes into some detail about the implications of a nation's ability to print money, inflation and he argues that it's not a free lunch. A clear swipe at MMT IMO. Which is interesting. He finishes that particular point with this comment:

    So the RBA won't be sending out the helicopters and dropping money into people's bank accounts, but it will support the sale of debt and other fiscal measures such as taxes and welfare. Can't really see the difference myself, I must be missing something.

    On negative interest rates:

    And on intervention in the forex market:

    And finally, he's back on his favourite topic ie clearly demonstrating that central banks are about as independent as being assimilated by the Borg with the reiteration of his fiscal policy message:

    https://rba.gov.au/speeches/2020/sp-gov-2020-07-21.html
     
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  2. 66rounds

    66rounds Well-Known Member Silver Stacker

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    Reassuring but I just can't trust them to stay honest.
     
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  3. leo25

    leo25 Well-Known Member Silver Stacker

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    RBA buys government bonds, then says the government is able to finance itself in the bond market. Lowe is a master idiot. :D
     
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  4. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Haha, they're not honest. They're in the business of corporate scams. You can trust them to to support the finance market which means they'll keep urging the government to sell bonds on the primary market and they'll guarantee to buy these bonds on the secondary market to keep their mates safe.
     
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  5. Ryurazu

    Ryurazu Member

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    Well most of that bank balance sheet increase went to the 4 big banks is my guess and to purchasing bonds (helicopter money). They will be force to MMT the US already in MMT which mean that you as the RBA are forced since you also have a fiat currency with no physical backing meaning you can do it, it just how much you can get away with it and that's why it's just lying and I tend to ignore what they are say and focus on what they are doing.
     
  6. leo25

    leo25 Well-Known Member Silver Stacker

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    I listened to the full talk today and found Lowe to be all over the place, like he was playing good cop bad cop.

    Anywho he made it very clear that the RBA doesn't interfere with the AUD exchange rate, but looking at these charts makes it seem as if they do. Is there another way to interpret this?

    aus charts.jpg
     
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  7. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    @leo25, from what I've read here: https://www.rba.gov.au/publications...rting-australias-foreign-reserve-holdings.pdf, the RBA reports on foreign reserves in a few different ways.

    I'm not sure which way is represented in the "Australian Foreign Exchange Reserves" chart, but by the look of the volatility it could be the RBA's "Official Reserve Assets" (ORA). The amounts vary quite a bit according to the short-term (up to 3 months) FX swaps the RBA engages in, apparently. The publication explains that if the RBA was to engage in FX intervention during a depreciation in the AUD then it wouldn't be short-term rollovers like the FX swaps, but long-term borrowings of up to five years and would be dipping into the Net Foreign Reserve in order to fund such move.

    The chart below compares both reportable assets. You can clearly see the volatility in ORA, including the fall in 2020 as well as the steadier rise in net reserves with only a small decline in 2020.

    Screen Shot 2020-07-23 at 4.42.00 pm.png

    Dunno if that helps.
     
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  8. leo25

    leo25 Well-Known Member Silver Stacker

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    Haven't read the PDF, but will give it a read tomorrow.

    They say the don't directly intervene in FX markets, but do they indirectly do it? Just like how the RBA say they don't directly help finance government spending, but we know they indirectly finance government spending. These guys are like onion layers.
     
    Last edited: Jul 23, 2020
  9. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    They’ve probably got their own RBA glossary of terms. :p

    Like when they “engage” in the Forex market it means they’re buying and selling, butterflies are in the air and Angus and Julia Stone is on the office sound system. And when they “intervene” in the Forex market it means the shit has sprayed through headquarters and it’s all Parkway Drive and The Amity Affliction.
     
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