Following a rebound in equity markets over the first two months of 2019, equity markets moderated throughout March as bond market headlines became the flavour of the month. Meanwhile, ABS figures revealed deteriorating economic data as GDP grew at just 0.2% in the December quarter, which translated to an annualised rate of 2.3%. This increased market expectations that the central bank would further revise its forecast of 2.8% growth over 2019. Despite this, labour market conditions continue to defy this narrative with the trend unemployment rate remaining steady at 5.0% in February as RBA board members look to further declines in spare capacity to translate into a pick-up in wage pressures and subsequently inflation. This data will be key in determining the RBA’s monetary policy path over the coming months as strong unemployment figures counter the arguments for slicing interest rates which are being fuelled by slowing domestic and global growth, declining house prices, sluggish growth in household income and elevated debt levels.. Figure 1. Term Deposit Spread Over Relevant BBSW: March 2019 vs February 2019 Source: RBA, BondAdviser For full details, charts and commentary, please click here for the full pdf version.