Australian consumers think interest rates will be higher in 2017 but despite this they are more optimistic, or less pessimistic than they were in December. The Westpac-Melbourne Institute consumer sentiment index rose in January, recording a 2.2 increase to 99.6. Any reading below 100 indicates the number of consumers who are pessimistic is more than the number of consumers who are optimistic. Westpac described the readings as indicating sentiment was at “cautiously pessimistic”’ levels and the result of “renewed concerns about the economic outlook combined with signs of increased pressure on family finances.” All five components of the index improved, although other parts of the survey such as the Unemployment Expectations Index deteriorated to some degree.
By the close of business, 3 year and 10 year yields were both 5bps higher at 2.04% s and 2.82% respectively. The AUD was around 0.5 US cents higher at just over 77.10 US cents.