Markets Overview

  • ASX SPI 200 futures down 0.2% to 7,765.00
  • Dow Average up 0.3% to 39,512.84
  • Aussie down 0.3% to 0.6603 per US$
  • US 10-year yield rose 4.3bps to 4.4963%
  • Australia 3-year bond yield fell 1.8 bps to 3.97%
  • Australia 10-year bond yield fell 2.5 bps to 4.32%
  • Gold spot up 0.6% to $2,360.50
  • Brent futures down 1.3% to $82.79/bbl

Economic Events

  • 11:30: (AU) April NAB Business Conditions, prior 9
  • 11:30: (AU) April NAB Business Confidence, prior 1
  • 14:30: (AU) April CBA Household Spending MoM, prior 0.2%
  • 14:30: (AU) April CBA Household Spending YoY, prior 3.4%

The stock market struggled to gain much traction after data pointed to an economy that is slowing amid stubborn inflation, posing a challenge to the outlook of Federal Reserve policy.

Equities wavered and bond yields rose following a report that showed US consumer sentiment declined to a six-month low as short-term inflation expectations picked up. While a slowdown in key sectors has encouraged bets on Fed rate cuts, a chorus of officials continued to echo the higher-for-longer mantra as they try to bring inflation back to the 2% target.

The S&P 500 hovered near 5,220, while notching its third straight week of gains — the longest winning run since February. The Dow Jones Industrial Average rose for an eighth straight session.

Treasury 10-year yields advanced five basis points to 4.50%. Fed swaps showed traders have fully priced in a rate cut by November, and a second reduction by the January meeting.

Other News

The Australian government has promised to spend billions on housing programs as it tries to appease mounting voter angst about a chronic shortage of homes.

The new package, announced ahead of this week’s budget which is expected to focus on the cost of living, is mainly comprised of funding commitments for the country’s states and territories. It includes A$9.3 billion ($6.1 billion) over five years to build and repair social housing and combat homelessness, A$1 billion for new housing infrastructure like roads and sewers, and A$1 billion for crisis housing for people fleeing domestic violence.

“This isn’t about one suburb or one city or one state,” Prime Minister Anthony Albanese said Saturday. “It’s a challenge facing Australians everywhere and it needs action from every level of government.”

While the plan was welcomed by industry bodies, the Greens said much of the money was just “repackaged’. Speaking on a trip to Tasmania, Albanese rejected that characterization, “saying the money represented the “greatest investment in housing that we’ve seen for some time.”

The government has set itself a target of building 1.2 million new homes by 2030, but progress has been slow. Apartment approvals tumbled to a 12-year low in February as capacity constraints and rising costs weighed on construction. At the same time, a post-Covid rebound in immigration has seen Australia’s population swell, intensifying competition for property and sending both rents and prices soaring.

Widespread concern about the problems, combined with the pressure households are under from higher interest rates and inflation, has weighed on the government’s popularity.

“Cost of living is the defining challenge in our economy right now,” Treasurer Jim Chalmers said in an interview with the Australian Financial Review. “We share that priority. You’ll see that in our own budget.”