Daily Commentary BY THE CURVE TEAM –

Crunch Time

29th of May, 2017

A week of key data and events could reshape the monetary policy outlook. This is the case both here and offshore as conjecture grows over whether or not the recent dip in data is in fact transitory.

Offshore first, we have a large line-up of Fed speakers ahead of the all important non-farm payrolls release on Friday. Despite the data still printing weaker than expected and the Citi surprise index at its recent low, the FOMC so far is sticking to its optimistic outlook. While the week will be focused primarily on the non-farm release; consumer spending, inflation, housing and general activity data will also be released in the lead up.

It is a similar story in Australia, as the ballooning household debt in recent years driven by ultra low rates starts to take its toll. Following last week’s disappointing construction work numbers, CAPEX will be out this week ahead of the final GDP figure due next Wednesday. Current expectations are for a moderate 0.5% rise after last quarters big fall.

There will be plenty of key monthly data also due out with retail sales arguably the most significant. After falling three of the past four months, expectations are for a 0.3% rise in April. With the construction boom showing increasing signs of fading, building approvals will be closely monitored after last months 13.4% collapse. Other releases of note include the weekly consumer sentiment pulse and the RBA’s monthly private sector credit data.

How the data and events above unfold have the potential to re-shape the outlook for monetary policy.

David Flanagan

Director - Interest Rate Markets