Australia Macro+ Week Ahead: Position, Position

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Australia Macro+ Week Ahead: Position, Position

ednesdayAU Building1 JulyApprovals May 2.0%M, 10.1%Y 0.0%M -3.4%M, 10.2%Y

some closing if RBA rate cuts are priced, but we still see that as more likely next CNThursdayCaixin2 JulyManufacturing PMI Jun -- 51.9 51.8

year. The underweight Resources position faces some risks, in our view, given capex- AUUS TradeISM IndexBalance MayJun A$2.5bn-- A$2.4bn53.8 A$1.8bn54.0

driven upside to global economic conditions (more below). USUS NonAverageFarmHourlyPayrollsEarnings JunJun ---- 0.3%M130k 0.3%M,172k3.4%Y

US Unemployment rate Jun -- 4.3% 4.3%

Macro Catalysts – Private Sector Credit (May), Housing Prices (May), Building Friday 3 July

Approvals (May), Trade Balance (May): We expect private sector credit to have Source: Bloomberg, Morgan Stanley Research estimates. International

releases are dated based on Australian time zone.

risen 0.6%M in May, pushing the annual rate to 8.5%Y. We expect housing prices to

have declined in May, with weakness most evident in Sydney and Melbourne as the

housing downturn gets more entrenched. For building approvals, we expect a rise of

2.0%M, 10.1%Y, marking a partial rebound after two consecutive monthly declines.

Finally, we expect the trade surplus to widen to A$2.5bn in May.

Last Week – CPI (May), Labour Force (May), Household Spending (May):

Headline CPI was softer than expected in May, falling to 4.0%Y from 4.2%Y. Lower

fuel prices were the main driver, reflecting halving of fuel excise/lower global oil

prices. However, underlying signal was firmer and above our/consensus expectations

– trimmed mean rose to 3.6%Y from 3.4%Y, with a 0.38%M monthly increase (vs.

0.31%M previously). The labour force print for May was mixed – employment rose

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