18 March 2019
Bassanese Bites: Two or less? – Week beginning: 18 March 2019
Confidence returned to global equities last week – after a modest pull back over the previous week – largely due to reassuring US economic data. US retail sales rebounded nicely in January – after worrying softness in Q4 – while the US CPI also remained comfortably benign. Lurking in the background is growing confidence that the US and China will eventually settle their trade differences, although there is no longer an explicit deadline in place. Even more important than the actual deal itself is growing recognition that neither side appears to have the appetite to escalate tensions further – through tit-for-tat tariff increases. In terms of key market moves, US and Australian 10-year bond yields broke to new lows in the downtrend that has been in place since late last year.
Economic news was less reassuring elsewhere. German industrial production was weaker than expected in January, though temporary factors like strikes and model change-over disruptions were blamed. China’s monthly “data dump” was also soft, with ongoing weakness in retail sales and industrial production – though again hope springs eternal that the Government is set to re-stimulate the economy.
In Australia, the negative news also continued: the NAB index of business conditions slipped back in February, consumer confidence dropped and home loan approvals dropped further.
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