Today, the remaining PMIs were released. As expected, all are strong, indicating a firm expansion, albeit at a fractionally more modest pace than the prior month. This is to be expected, the data will continue to moderate, as COVID affects are normalised.
The very strong home lending data is flowing into the building approvals data, as expected. What’s good for banks is good for builders (generally) and good for discretionary retailers.
Whilst we view all 3 sectors as over-earning, there are pockets of value within the building materials space, companies like Adbri strike us as potentially interesting.
No change, as expected, from the RBA. The term funding facility won’t be extended (source of ultra low borrowing costs for banks), as expected. Little to see here. The RBA is on hold – however this won’t stop longer dated yields (e.g. 10+yrs) from rising, even as the front end of the curve is pinned down (out to the 3yr, and to a lesser extent, the 5yr).
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