During most of the period between 2014 and 2018 a divergence between consumer sentiment and business confidence in Australia was evident. Normally, the two sectors could be expected to generally track the same path, so an extended difference between the two was somewhat unusual. Around July 2018, the two sectors converged again and they are once again largely in line with each other. Unfortunately, this synchronisation occurred around levels which are neutral to slightly negative.
According to the latest Westpac-Melbourne Institute survey conducted in early-March, average household optimism continued to bounce around neutral levels as the Consumer Sentiment Index retreated under 100 once again, this time from February’s reading of 103.8 to 98.8. Any reading above 100 indicates the number of consumers who are optimistic is greater than the number of consumers who are pessimistic. The long-term average reading is just over 101.
Local bond yields fell considerably, following negative US movements from the previous evening but by a larger magnitude. By the end of the day, 3-year ACGB yields had dropped by 6bps to 1.55%, the 10-year yield was 7bps lower at 1.97% and the 20-year has lost 6bps to 2.36%.