Kit Lowe

Former WSJ journo Jon Hilsenrath responds on LinkedIn ATTENTION MR. BESSENT, 2.0: YOU ARE COMING UP SHORT ON YOUR OWN '3-3-3' GOALS Treasury Secretary Scott Bessent has been attacking financial journalists on Twitter [X] this morning. It's petty, but let's judge a man not by what he says. Let's judge him on what he accomplishes. During the 2024 presidential campaign, Bessent laid out a '3-3-3' economic agenda for his prospective administration. This was a promise to achieve annual economic growth of 3%, reduce the federal budget deficit to 3% of gross domestic product, and increase daily output of oil by 3 million barrels per day. President Trump's economic co-pilot is failing on every count: -- Growth in economic output as measured by real gross domestic product slowed to a 1.95% annualized rate during President Trump's first 18 months in office. That's a slower growth rate than the average 3.2% rate when Biden was in office, though the Biden rate was bolstered by a post-Covid pandemic recovery. The Bessent 1.95% growth rate is a touch slower than the 2.0% growth rate during Obama's eight year term in office. -- The budget deficit is estimated by the Congressional Budget Office to be 5.8% in the fiscal year that ends in September, nearly double the Treasury Secretary's promised rate. In order to reach 3% of GDP, the budget deficit would need to be nearly a trillion dollars smaller. Instead, it will rise next year, in part because of the cost of funding the war in the Persian Gulf. I see little evidence that the present administration, or anyone in Washington for that matter, has a credible plan to reduce the red ink that's spilling forth like a geyser from Washington on a daily basis. -- Domestic oil production averaged 13.71 million barrels daily in May, up 0.57 million from 13.14 million in January 2025. Again, short of the goal. Implicit in the promise on oil production was a promise that energy costs would ease. They have not. On one count that matters to many Americans, the economy is delivering a number with a "3" in it: The inflation rate was 3.7% higher in June that it was a year earlier, as measured by the Federal Reserve's preferred personal consumption expenditure price index. I have no desire to get political, but when a politician attacks honest people who I know and respect, that bugs me. It's petty, and meant purely as distraction.

What’s the bet RBA’s Hauser has a lot of cricket references. Talks a bit about next year’s Ashes. Was probably busy re writing his speech after Tuesday 😀🏏

All those people who sold their Australian investment properties and bought New Zealand properties might be interest in the fact that NZ Labour proposes a 28% capital gains tax on investment properties and removal of investment tax incentives. The Election is this weekend. $NZD #AusPol

Since this tweet ES futures +256 ticks, NASDAQ futures +1,354 ticks, DJIA closed +3%, SP +1.6%, NASDAQ +1.4%. Mid-terms are a market clearing event with positioning a lot cleaner now. THANK-YOU FOR YOUR ATTENTION TO THIS MATTER!

AI trade getting squashed as anti-data centre Dems win some surprise Governorships. But as Jim Reid says...... The market has been higher 12 months after almost every midterm election. Since WWII, 20 out of 20. The S&P 500 has been higher 12 months after the election-day close following every midterm from 1946 to 2022. The average gain is +14.4% and the median +13.7%. Since 1930, 22 out of 24 (92%). The average gain is +13.0% and the median +13.7%.

DEMOCRAT CASTOR WINS FLORIDA HOUSE RACE, NBC PROJECTS Note: Axios said in their preview: The great mid-cycle redistricting wars transformed this Tampa-based district from Harris +8 to Trump +11. If Democratic Rep. Kathy Castor survives, Republicans can all but kiss their majority goodbye.

Polls shut in Indiana and most of Kentucky for the US midterms. As Bruce Springsteen sang in Badlands: " Poor man wanna be rich Rich man wanna be king And a king ain't satisfied 'Til he rules everything I wanna go out tonight I wanna find out what I got" #USElections

Gone are the days of complacency Gone are the nights of indifference Boom Crash Opera, Dancing in the Storm , 1990

O' beautiful, for spacious skies But now those skies are threatening They're beating plowshares into swords For this tired old man that we elected king Armchair warriors often fail And we've been poisoned by these fairy tale Don Henley, 1989 #USElections2026

RBA Gov Bullock just said that the balance of risks are close to equal. I have tweeted for years that is a sign that the RBA is liklely to hold at the next meeting and along with a 6-3 split vote, swap markets will receive and I expect a December hold. 2027 is still live given the RBA does not see inflation at target until June 2028. #AusPol

Macquarie’s quant team #MelbourneCup

*RBA: SIX VOTED TO HIKE, THREE TO HOLD

I can't see a 40bps hike by the RBA today that would send the signal that the RBA thinks it has done enough. AUD OIS is pricing an 89% chance of a 25bps hike at today’s RBA meeting. A total of 37bps of hikes are priced by May 2027 with the peak in the cash rate seen at 4.97%. The odds are about right with memories of the July 2025 RBA hold and last week’s RBNZ hold fresh in traders’ minds. The RBA will take market pricing when it works out its SOMP forecasts as it is not keen on giving forward guidance of its own. Assuming the RBA hikes traders will focus on when the RBA thinks it will hit the mid-point of its inflation target at 2.5%. In the August SOMP the RBA did not expect to hit the 2.5% target until sometime in the June half of 2028. If one rate hike is not enough for the RBA to forecast inflation at 2.5% by Q4 2027 then markets will immediately price at least a 50% chance of a follow up hike at the December 9 meeting. Currently Nov-Dec OIS spread is trading ~ 6bps but should shift to ~ 12.5bps. The OIS strip should steepen out to May 2027 before flattening from that point on. If the RBA moves its forecast of returning inflation to the 2.5% midpoint out to H2 2028 then we should see paying flows out to Aug 2027 with the strip steepening out to that point.

The Rate That Stops A Nation #MelbourneCup

As called. Australia’s home prices tumbled for a seventh straight month and are on track for the biggest fall in 40 years. The Home Value Index for major cities slid 1.4% in October and is down 8.1% over the past seven months, property consultancy Cotality said. Conditions in the rental market eased. The vacancy rate rose to 2.3%, close to its decade average (2.4%). Rents rose 0.9% (seasonally adjusted) over the past three months, the lowest since January 2025.

I’m thinking about going to the RBA’s #Halloween party dressed as an inverse yield curve 😀#Auspol

RBNZ board member Prasanna Gai spoke at the 2026 Bank of Canada Annual Economic Conference overnight. His speech was titled “Straits, Swaps and Resilient Openness”. Gaid did not touch on NZ MP. Gai argued that globalization should not be reversed. Instead, countries should preserve the benefits of interconnected trade and finance while building credible alternatives and redundancies that prevent a single failure from causing a systemic collapse. The challenge for policymakers is creating a system of “resilient openness” that remains connected but is no longer dangerously dependent on any single hub. rbnz.govt.nz/-/media/project…

A very uncomfortable Silk and Conway sitting next to RBNZ Gov Breman at this presser 😀

New RBNZ member Rebecca Williams was the swing vote ! vote was 4-3 to hold