Australian Markets Weekly – NAB business survey and RBA speech

Price developments over the past week supportive of NAB view that markets had become overly pessimistic on the growth outlook – commodities, equities and the $A all rally strongly; bond yields rise sharply.

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NAB business survey and RBA Deputy Governor speech “Resilience and Ongoing Challenges”

  • Price developments over the past week supportive of NAB view that markets had become overly pessimistic on the growth outlook – commodities, equities and the $A all rally strongly; bond yields rise sharply.
  • Australian GDP stronger than expected – and importantly shows non-mining economy back above long-term average growth rates. There’s not much the RBA can do with interest rates about weakness in the mining sector.
  • US data also better than expected, with strong payrolls and ISM surveys showing some resilience. Low wages print likely due to survey being taken before the 15th so should be disregarded. Market expectations for the Fed for 2016 have re-priced somewhat over the past week and still look underdone.
  • Key local events this week are ANZ job ads (Monday); NAB business survey and RBA Deputy Governor Speech (Tuesday); consumer confidence (Wednesday). Offshore, focus is on central bank meetings in NZ, Canada and the ECB.
  • Key market discussion likely to be around the implications of the $A being back above US$0.74, but coming with an ongoing recovery in the iron ore price.

For further information please refer to the attached report:

For further FX, Interest rate and Commodities information visit nab.com.au/nabfinancialmarkets

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