Eurozone shares +1.2%
US shares +0.1%, Nasdaq -0.1%
US 10 yr yld -3bp to 4.56%
Oil -0.6% to $78.4
Gold -0.5% to $2314.1
Iron ore -0.8% to $118.55
ASX futures +0.2%
$A 0.6593 with $US index +0.2%

Banks net interest margins (the gap between the rate they charge on loans and the rate they borrow funds at) have fallen recently reflecting eg increased competition in the mortgage market and have been trending down for two decades plus.
(RBA SOMP chart)

The RBA is projecting an improvement in real growth in household disposable income helped by lower inflation, slower growth in tax payable and slower growth in net interest payments
(RBA SOMP chart)

The RBA projects that scheduled mortgage payments as a share of household income will reach historic highs this year. Total debt payments are likely to be a bit below historic highs because of more moderate consumer debt payments compared to 16 years ago.
(RBA SOMP chart)

The RBAs inflation forecasts revised up for 2024..with trimmed mean back ~Nov SOMP forecasts. But both headline & trimmed mean back in target next yr & at mid point by mid-2026, indicating RBA sees the hot Q1 inflation has a temp set back not justifying another hike. Makes sense.

The RBA revised up its 2024 inflation forecasts but no chg for Dec 2025 & Jun 2026 so still seeing back in target next yr & mid point in 2026...partly explains why no hike
The risk of a near term hike is hi - but our (revised after CPI) rate outlook is no chg to yr end then a cut

#RBA held at 4.35% noting: hi rates bringing better balance but excess demand remains; jobs mkt still 2 tight; & infl moderating more slowly than exp. Reiterated its 'not ruling anything in or out', but language more hawkish => little tolerance for another upside infl surprise

Aust Mar qtr real retail sales -0.4%qoq/-1.3%yoy, worse than exp & down 5 of the last 6 qtrs
Q1 consumer spending is looking very soft
Real per capita retail sales -1%qoq/-3.6%yoy…& down for 7 consecutive qtrs as high rates & cost of living pressures continue to hit
ABS charts

The latest Fed bank lending officers survey shows a further tightening in lending standards (except for prime mortgages), albeit at a generally slower rate.

Eurozone shares +0.7%
US shares +1%, Nasdaq +1.2%
US 10 yr yld -2bp to 4.49%
Oil +0.9% to $78.8
Gold +1.1% to $2326.1
Iron ore +1.6% to $119.95
ASX futures +0.5%
$A 0.6623 with $US index flat

The attached note looks at seasonal patterns in shares and whether its time to “sell in May and go away” along the lines of the old share market saying.

Oliver's Insights - seasonal patterns in shares amp.com.au/insights-hub/b…

China Caixin services PMI only -0.2pts to 52.5 in April, far stronger than the official NBS services PMI.
(Goldman Sachs chart)

Aust Apr Melb Institute Inflation Gauge +0.1%mom/3.7%yoy, down from 3.8%
Trimmed mean +0.2%mom/3.2%yoy, down from 3.8%

The Inflation Gauge lagged the CPI on the way up and has done some of the same on the way down…but it’s continuing to slow which is a good sign.

Prelim Domain auction clearances
Syd 71%=final ~69%,May norm 67%
Mel 61%=final~58%,May norm 67%
Syd started May on a stronger note,but Mel continues to weaken. Sales in both r down from recent highs. The housing shortage remains but hi rates for longer will dampen things
#ausecon

US Apr services ISM -2pts to 49.4, employment and orders also down = another sign of cooling
Prices paid +5.8pts to 59.2 but still in normal range
(Bloomberg charts)

US Apr payrolls +175k, prior 2 mths revised -22k, softer than exp.
Unemp +0.1% to 3.9%
Temp emp down again
Avg hrly earnings +0.2%m/+3.9%yoy, < exp
Suggests econ cooling which will take pressure off inflation & allow Fed cuts later this yr. Our base case remains Sept
(ISI charts)

Eurozone shares +1.3% (-0.9% wk)
US shares +1.3% (+0.5% wk) as softer jobs & wages grth eased overheating fears & good for Fed
US 10 yr yld -7bp to 4.51%
Oil -1.1% to $78.1
Gold -0.1% to $2301.7
Iron ore +0.2% to $118.2
ASX futures +0.3%
$A 0.6607 w $US -0.3%
(Bloomberg chart)

Weekly economic & market update - Fed less hawkish than feared; US stagflation or just getting back on track?; RBA to hold, with a tightening bias; Aust consumer remains weak; Aust budget preview

amp.com.au/insights-hub/b…

China subway usage still tending to track > 2023 & 2019. Traffic congestion tending to track < 2019 though
New property sales tending to track below 2019 & 2023 levels
Tonnage of departing ships running ~ 2023 levels & > 2019
Steel production & demand running below normal levels

Simplifying Investing Podcast: Ep 120 Revisiting retail and home prices: will we see another rate hike?

And does more money = more happiness?

Full ep on:
🎙 Spotify: open.spotify.com/episode/7kpkEU…
📺YouTube: youtube.com/watch?v=QojP45…

Shane Oliver Diana Mousina