Daily Commentary BY THE CURVE TEAM –

Surprise Result Ahead of RBA Update

20th of May, 2019

The market has plenty to digest this morning after a surprise result when Australian’s headed to the polls over the weekend. It comes ahead of a key update from the RBA.

The Federal Election over the weekend provided a big surprise for the market. After polls for months had suggested that Labor was destined to swept into power, the Coalition have snatched victory from the jaws of defeat. What is important now is the reaction for the broader economy.

With uncertainty over the political future now out of the way, the hope is that businesses and consumers will be able to move forward. Many had been sitting on their hands given the uncertainty over many policies that effects most businesses and households in the electorate. Regardless of who was elected, a large degree of uncertainty has now dissipated so let’s hope it provides a boost to the economy.

The surprise result comes ahead of a key RBA update. RBA Governor Lowe is set to speak tomorrow and his appearance at the Economic Society of Australia business lunch will garner plenty of interest after the latest employment data last week.

The governor’s speech is titled ‘The Economic Outlook and Monetary Policy’.  It will be interesting to hear their take on last weeks mixed read on employment and if it has materially changed the outlook. The speech could be used as a platform to flag a shift in the outlook for monetary policy. Equally, it could be used to provide further evidence to support the RBA’s current outlook.

We will find out when the speech is released at lunch time tomorrow, 45 minutes after the RBA releases the minutes from their May Board meeting.

David Flanagan

Director - Interest Rate Markets