Bank lending tightens and wages rise putting pressure on household finances, Australian GDP growth on the upside, supply for Suncorp 2023c remains accessible, AAA rated Ale 2023 ILB bond still in supply, PJS 2030 IAB popular as longer dated inflation hedge
AUD & USD
- Australian GDP for 2Q18 was released last Wednesday, with headline annual growth of 3.4%, surprising on the upside. This number was helped by an upward revision of 0.5% from previous quarters but is not as good as it appeared.
- Of particular concern is the rising pressure on household finances, with personal savings plummeting due to slow wage rises and tightening of bank lending. Household debt stress together with uncertain inflationary pressure and recent mortgage rate increases by three of the top four major banks reinforces our view that the RBA cash rate will remain on hold longer.