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What to Watch - Week of 20 May

It will be a quieter week on the Australian calendar with the RBA Minutes released on Tuesday. Around the globe the FOMC releases its latest meeting minutes on Wednesday with Nvidia earnings the spotlight on the equity docket. The UK, Japan and Canada release inflation figures and the G7 finance ministers meet from Thursday.

Tapas Strickland & Taylor Nugent | Markets Research

Past Week

  • Global yields fell following a US CPI print that did not come in hotter than expected, bucking the trend of the prior three months. Equities rallied with the S&P500 making fresh record highs.
  • In Australia, it was a big week with the Federal Budget, Q1 WPI and Labour Force. In the end it was the unemployment rate that was the most market moving which saw a sharp surprising rise (4.1% vs. 3.9% expected)
  • Markets now price around a 50% chance of an RBA rate cut by December 2024, well up on a 0% chance being priced last week.

Comment

  • Developments in China suggest authorities are contemplating a drastic restructuring of the property sector and listed property stocks increased sharply over the past week
  • The latest proposal is for the inventory of unsold homes to be put onto government books with local state-owned enterprises being asked to purchase inventory from distressed developers at steep discounts
  • Officials contemplating more drastic support for the beleaguered property sector should help a Chinese recovery. Such action would be AUD and commodity supportive. An important area to watch

Week ahead

  • It is a lull in the Australian calendar, with only the RBA Minutes and Consumer Confidence (Tuesday) of any note
  • RBNZ (Wednesday) is expected to be on hold with little change to its previous messaging
  • In the US, FOMC Minutes and Nvidia earnings (both Wednesday) feature, with plenty of Fed speakers throughout the week.
  • Flash Global PMIs (Thursday). Will they continue to suggest some of the US outperformance is narrowing amid ongoing European recovery?
  • UK April CPI (Wednesday) should dip back to around 2% on energy price falls. Japan CPI is also expected to slow in y/y terms on Friday.
  • CA April CPI (Tuesday) also worth a look given the paring back of BoC June rate cut pricing which now stands at around 50%
  • The G7 finance ministers meet from Thursday.

View the full report here

Also in the What to Watch

 

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NAB Markets Research

Our markets team is keeping clients informed with award-winning in-depth analysis on the Australian economy, foreign currency, fixed income, credit and commodities markets.