CORPORATE AND INSTITUTIONAL

Our latest weekly consumer tracking data to 14 May was broadly quite encouraging.

NAB’s Commercial Property Index rose to +11 pts in Q1, building on the gains seen in the last quarter when the index moved back into positive territory for the first time in 2 years.

The S&P500 high to low fall since the early January high puts it down 19% year to date and although not officially in bear market territory yet, looks to be only a matter of time.

The UK’s unemployment rate fell to it’s lowest level since 1974 and along with a further pickup in average earnings growth, now see money markets pricing 125bps of BOE rate hikes by December.

It’s clear that with unemployment close to full employment levels and inflation way above target and forecast to rise higher, Australian interest rate settings should no longer be anywhere close to the emergency low settings implemented in the pandemic.

The biggest news overnight is commodities, oil prices are up, which threatens to prolong the inflation narrative.

COVID lockdowns point to weaker growth and greater uncertainty in the near term.

US Consumer Sentiment fell further than expected to be at its lowest level since August 2011 and with consumer confidence so low, the risk of recession is rising.

We now expect the global economy to grow by around 3.4% in 2022 and 2023. For Australia, we continue to be optimistic on the economy expecting above-trend growth this year and ongoing strength in the labour market.

Risk assets remained out of favour as concerns over inflation and recession risk continued to dominate.

Growth set to slow to below its long-run average

Another volatile session in markets with an upward surprise in the April US inflation data release adding an extra layer of uncertainty