Markets continue to suffer as trade negotiations persist, placing Australian firms in a very uncertain environment. The ASX 200 gained a modest 0.3% in May, aggressively retracing gains made earlier in the month and with the first trading day of June being the worst for the year to date. This followed soft credit growth in April (+0.16%), with tighter lending conditions settling in and personal lending – a good barometer for consumer sentiment and the overall cycle – turning negative. Since futures markets begun pricing in the next rate cut in February, the landscape has shifted drastically, with the implied likelihood of a rate cut having mounted with every passing meeting. Finally capitulating in June 2019, the RBA has acknowledged that criteria had been satisfied for further easing despite the uptick in housing performance and some reversion in clearance rates. Figure 1. Term Deposit Spread Over Relevant BBSW: May 2019 v April 2019 Source: RBA, BondAdviser For full details, charts and commentary, please click here for the full pdf version.