Originally published by IFM Investors
- US: the Trump trade has paused but the reflation thematic is still intact. US business and consumer sentiment has improved materially since the election but we will need to see policy progress before this is translated into sustained improvements in activity.
- UK: the UK government has now triggered Brexit , consensus remains that this will be a difficult and elongated process in which the EU holds most of the cards. Given this current expectations from negotiations of UK politicians and media are somewhat optimistic.
In Australia some progress has been made on fiscal policy around business tax cuts. Yet this ‘spending’ will need to be recovered elsewhere in the upcoming budget. Windfall gains from commodities prices will serve to improve budget metrics but credit ratings agencies will still want to see ongoing reform if the threat of downgrade is to be reduced. Housing affordability is also a key issue going into the budget. However it seems that the government will be doing little pro-active reform that would address this issue materially in the short term. The regulator has implemented further restrictions on property investment but these will do little to limit house price growth in eastern states and therefore the RBA has less policy freedom as a result.
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