Deficits, Looser Restrictions & The RBA

Futures showing a very modest degree of twist flattening vs. Friday's Sydney closing levels, after sticking to a tight range during the final SYCOM session of last week. YM -0.5, XM +0.5.

• Looking to the local backdrop, weekend news flow saw the release of an AFR interview with Victorian Treasurer Tim Pallas. He noted that the "Victorian government will deliver an unprecedented A$23.3bn budget deficit next financial year, with net debt expected to blow out to A$155bn within three years, after the state's tax revenue fell by 11.9%." He also noted that property taxes have been badly hit but that "now is not the time" to follow NSW in switching from stamp duty to another tax." Elsewhere, Victoria state inhabitants have seen some of the social restrictions in the state loosened further.
• Local flash PMI data saw a swifter rate of expansion across the 3 major readings, while IHS Markit noted that "latest PMI data showed the recovery in the Australian private sector economy gained pace during November, setting the scene for a stronger GDP performance during the final quarter of 2020…. Business confidence also improved to the strongest for over two years as firms were optimistic about market conditions returning to normal in a year's time." Still, it wasn't all positive news, as the report noted "the subdued rise in new business remains a concern. Renewed lockdown measures in parts of the world due to second waves of infections may keep border controls and travel restrictions in place for a longer period."
• The latest round of RBA ACGB purchases will be conducted later today.