Bonds/Interest Rates

Main Street voted down Wall Street last night on both sides of the House, rejecting the rescue plan . The Dow fell 770 points, its biggest fall since trading opened after 9/11.

While the ink’s not dry and no one has signed anything yet, the latest news from Washington is that a plan has been agreed upon and is now being drafted.

The Dow rallied 200 points as The Plan moved another inch closer to agreement, but it is a very watered down model that Paulson may have to accept.

All financial markets were as good as unchanged last night as the world goes into limbo. A resolution on The Plan does not yet look imminent. (Locked for subscribers until 10:00 AEST)

The Dow managed to hold square by 3pm but a lack of progress on Capitol Hill saw a late sell-off of another 161 points. (Locked for subscribers until 10:00 AEST)

Consumer inflation expectations in Australia hit a new record high at a time when the RBA started lowering official rates. What’s happening?

The Reserve Bank of New Zealand could make it back to back 0.5% interest rate cuts when it meets in October, says TD Securities.

It will involve maybe a US$1 trillion or more. The details are still being decided upon. It is hoped the plan can be rushed through Congress. Will it work?

Fear gripped Wall Street last night as corporate bond markets crashed and investors rushed out of equities and into Treasuries and gold. The Dow was down 450 and gold up over US$80.

The latest read of the Westpac–Melbourne Institute Leading Index is consistent with a weak outlook in the months ahead.