Daily Commentary BY THE CURVE TEAM –

Business Confidence Rock Solid But What About Consumer Confidence?

11th of October, 2017

Business conditions were released with most industries continuing to show strength, with the exception of retail. It is unclear how this positivity translates over to the consumer, but we’ll have to wait and see. 

The NAB Business Survey, released yesterday, is always a key piece of data domestically. The overarching theme of the survey was positive, with business conditions remaining robust at 14 for September and business confidence creeping higher to 7 from a very soft August number. The construction industry was found to have the best conditions, while retail continued its weakness by printing a negative number.

We will have access to the Westpac monthly consumer confidence figure today. Inflation indicators over the last few months have been mixed, in line with the 2017 narrative. We know that wage and income growth continues to be a key struggle for consumers, so the market isn’t exactly eagerly awaiting the consumer confidence number, albeit it is worth taking a look at.

Abroad, the Euro market was awaiting Catalan President Carles Puigdemont’s speech regarding the Catalonian Independence. However his speech failed to deliver anything other than suggesting an independence referendum is coming shortly. The IMF annual report for 2017 was released overnight (growth +0.1%) and the new forecasts echoed rhetoric that Oliver & Dave have been commentating for some time now; the global market continues to hum along within a low inflation and low growth cycle. The slight upgrade was on the back of growth forecast upgrades to the US, China and Europe.

There are a couple of Fed speakers tonight but we are unlikely to hear much that we haven’t heard from Dudley and Yellen in the last month or so. Most of the US market will be keeping an eye out for Friday’s CPI data, which will either give the Fed some sought after ammunition for a December rate hike or have them chasing their tails with lacklustre inflation data.

James Winder

Client Relationship Manager