ALP polling hits record low

Polling woes for Albo

The government's primary vote polled at a new record low of 24 per cent on the latest YouGov poll, on a sample taken over the week from October 13th to October 20th:

While this is an all-time low for the ALP, the next election could be more complicated than those that have gone before, due to the opposition vote being split between different parties.

As such, a lot will likely depend on preferences. 

It had seemed as though, mercifully, we might have reached the peak for the interest rate cycle in Australia.

Source: ASX

Unfortunately for the government, with the oil price back above $110/barrel and trading at the highest level since May, the pain may not be over yet.

Indeed, the Reserve Bank of Australia's Deputy Gov Andrew Hauser noted pointedly in a fireside chat interview today that inflation outlook is "materially worse than we projected in the August report", quickly moving market pricing for November to more than a 50/50 bet for another hike on Melbourne Cup Day.  

To be honest, if I was the Governor - thankfully not a problem I'll ever have to face down - at this stage I would likely just crack on with hiking again until inflation expectations are definitely broken. Plenty of room to bring rates down again next year if needed. 

In fairness, it's clear that the interest rate hikes delivered to date are already beginning to do their job. 

Coming off the back of the 5-year high in the unemployment rate, National Australia Bank announced yesterday that it would be firing 6 per cent of its internal workforce, with 2,500 jobs to go. It wouldn't be a surprise if other banks follow suit. 

Stockland has already reported that enquiries on its estates had fallen by -71 per cent from a year earlier to hit a 7-year low (sales were also down -24 per cent over the quarter). 

Meanwhile, Nick Scali reported today that domestic demand has slowed drastically:

And so on...

In any case, the outcome of the next Federal election will have significant implications for asset markets, with the Coalition pledging to repeal the tax reforms to negative gearing, capital gains tax, and discretionary trusts (while One Nation have proposed allowing negative gearing on up to two established investment properties per taxpayer). 

A tricky month or two ahead for the government, one senses.

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