Key Takeaway: Moody's downgraded Southern Water to junk status , citing financial and operational underperformance, compounding the broader issues facing the UK water sector. Southern Water Ltd’s credit rating was downgraded to junk by Moody’s , with a warning of potential further cuts due to its weak performance history and financial challenges. This downgrade impacts the company’s ability to raise the £4 billion in new debt and £650 million in equity required for its capital plans. The UK water industry is facing heightened scrutiny due to concerns over chronic leaks, sewage spills, and high-interest rates. Southern Water, which supplies over two million people in England, could face severe penalties from the regulator Ofwat , which may limit funds for essential upgrades. Following the downgrade, Southern Water’s 2026 bonds dropped 2.7 pence to around 85 pence on the pound. Despite the rating cut, Southern Water assured customers that services would continue unaffected, hig
Key Takeaway: Australia’s labour market remains firm despite slower job growth in October, keeping the Reserve Bank of Australia (RBA) on hold for rate cuts until mid-2025.
Australia’s employment growth cooled in October after a strong period, though the jobless rate held steady at 4.1% and the labour market continued to show resilience. This stability suggests that interest rate cuts may not come before mid-2025, with markets currently expecting a potential rate easing in May or July next year.
The Australian Bureau of Statistics reported a 15,900 increase in net employment in October, lower than September's revised 61,300 rise and short of the 25,000 forecast. However, annual jobs growth held strong at 2.7%, and the participation rate slipped slightly to 67.1% from an all-time high of 67.2%.
Labour Market Resilience
Su-Lin Ong, RBC Capital Markets’ chief economist, noted that the data underscores a firm labour market that remains tight. She added that the RBA will likely need to see more signs of softening before considering rate cuts.
The RBA has kept its policy rate steady at 4.35% for a year, up significantly from 0.1% during the pandemic, aiming to curb inflation while supporting employment gains. While headline inflation dropped to 2.8% in Q3, the underlying rate remains elevated at 3.5%.
Market expectations indicate only a 10% chance of a rate cut at the December 10 meeting and a 28% likelihood of action in February. Hours worked rose slightly by 0.1% in October, marking the fifth month of growth, while the underemployment rate eased to 6.2%, showing modest cooling in the resilient job market.
Tony Sycamore, an analyst at IG, commented that this slight softening offers the RBA space to focus on inflation while keeping rates high, without significant labour market decline.
Comments
Post a Comment