The iron ore price has enjoyed a huge rally this year.
It’s so huge that the 40%+ gains tower over pretty much every investable asset out there. Look:
And this may need to be updated further. On Friday iron ore was up another $2.58 to $66.24 a tonne, pegging its year-to-date rise at 52%.
The rally in the ore price will no doubt be a positive to the bottom line in the federal budget this week, but the net outcome as a result of other global and domestic forces is expected to be another modest increase in the deficit.
Another budget implication: this clearly disproportionate move for the commodity compared to other assets shows the difficulty that Treasury will have in setting a target for the price in budget forecasting.
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