The Reserve Bank later today and then the US jobs report (and wages data) for March on Friday will be the major events this week for local investors – along with the continuing re-examination of the valuations of tech stocks such as Facebook and Amazon.
On top of that there will be the usual start of month releases of data here and offshore, car sales data and the usual surveys of manufacturing activity in the world’s major economies (China’s two surveys have already reported over the break, while other countries released their start of month surveys overnight Monday.
Here the Reserve Bank will leave rates on hold for the 20th month in a row, which the AMP’s Dr Shane Oliver says “will surpass the previous record of 19 months on hold which was set between January 1995 and July 1996.”
No rate cut because business conditions and confidence remain a or near all time highs, jobs growth is in the midst of the best run in 40 years and corporate profits are solid.
But there will be no increase in rates, despite those factors because wages growth is low, inflation is not a concern and economic growth remains sluggish. House price growth is slowing, household debt is high and will continue so for years to come.
“We don’t see the RBA commencing a tightening cycle until first half 2019 and an emerging further tightening in bank lending standards around home borrower income and expenses along with any flow through to higher mortgage rates from the recent increase in short term funding costs could delay this, Dr Oliver wrote over the break.
We also will see the February building approvals and retail sales data tomorrow and the trade data for February on Thursday, as well as car sales figures and the start month surveys of manufacturing and services.
Australian home price data for March will be released later this morning.
In the US, the March jobs, unemployment and wages data to be released Friday night (our time) and Dr Oliver says the figures are “expected to show a solid 190,000 gain in payrolls, a fall in unemployment to 4% and a bounce back in wages growth to 2.8% year on year maintaining the gradual accelerating trend seen over the last few years.”
The start of moth surveys of US manufacturing and services are expected to again show high levels of activity, while the February trade deficit will rise.
In Europe eurozone core inflation for March is expected to edge up slightly to 1.1% year on year and unemployment is expected to fall further to 8.5% (both due Wednesday).
Neither will be enough to force the ECB up towards an exit from its easy money policy.
