Daily Commentary BY THE CURVE TEAM –

Key Upcoming Data To Test RBA’s Outlook

18th of February, 2019

While the global outlook was largely the focus over the weekend, the spotlight will shift to Australia over this week as important domestic figures test key features of the RBA’s outlook.

It began on Friday with the US averting another government shutdown as was widely expected. The good news continued for the US as Trump described trade talks as being “very productive” and President Xi stating that the most recent meetings “achieved important progress in another step”.

Although China’s trade talks provide a bright spot for the global outlook, their most recent PPI figures didn’t. China’s PPI came down from 0.9% in December to 0.1% in January to continue the downward trend over the past 2 years. This slide in PPI is likely to pull down world trade prices and ultimately add to global disinflationary pressures.

Shifting to the week ahead and the domestic front, some of the key data releases to look out for are the employment and wage figures over Wednesday and Thursday. Why this is key is because the RBA believes tight labour market conditions will lead to an increase in wage growth, which will boost household disposable income and ultimately inflation.

Governor Lowe stated that this “pick-up in household disposable income (will) provide a counterweight to the wealth effects of lower housing prices” and support growth.

RBA news continues with the minutes from February’s meeting set to be released tomorrow. We’re not likely to see anything new considering the wave of RBA insight we’ve recently received  However, we might gain valuable information from Governor Lowe’s parliamentary testimony on Friday, which will be after the employment and wage figures are released.

Neyavan Suthaharan

Client Services Officer