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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

Risk sentiment was supported last week by improving US economic data, the impact of the recent People’s Bank of China policy easing and expectations of additional European Central Bank stimulus. Consequently, we saw equities, commodities, interest rates and the US dollar all rise last week, while the commodity-based currencies, including the Australian dollar rallied.

In a string of data releases last week, the GDP data for the December quarter at 0.6% showing annual economic growth at 3.0% (a level not seen since March 2012) was well above the RBA’s growth forecast of 2.5% and reduced the prospect of the RBA cutting rates for now.

As a result, Australian swap yields have bounced strongly off the lows seen just over a week ago and the last week has had a completely different feel. Looking at the chart below it is particularly evident that most longer term yields have fallen and were trading at 3-month lows until last week.

Chart: 3yr, 5yr & 10yr swap rates

cash rate graph

Source: Rural Bank


Disclaimer: Whilst all care has been taken in compiling the information, the information should not be relied upon as substitute for professional advice where necessary. Rural Bank accepts no responsibility for the accuracy, completeness or timeliness of the information and disclaims all liability in relation to any loss or damage suffered by the use of or reliance upon any information contained herein or in any attachment or annexure hereto by any person. Rural Bank – A Division of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL 237879