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 15^th 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:

• Australian Markets Weekly: 7 March 2016 (PDF, 644kb)