Bonds/Interest Rates

Wall Street recovered from an opening loss on Friday following weak jobs data and the pre-emptive Thursday rout.

There was no waiting for tonight’s US employment data. The global economy levee broke last night and the world was down 3%.

The UK economy is arguably now the sickest of the world’s Top Five. It’s housing market has been the first to follow the US into slump. But for some reason the UK banking system seems to be fine.

Australian GDP increased a lower than expected 0.3% in the June quarter, making more rate cuts likely by the end of the year.

The oil price fell a total of nearly US$6 over the US long weekend but the subsequent 250 point rally in the Dow turned into down 26 by day’s end.

The RBA believes recent tight monetary policy along with other factors has worked, so there is now scope for further cutting.

The RBA today cut the cash rate by 25 basis points to 7.00%.

Australian company profits rose a far stronger than expected 14% in the June quarter, suggesting the RBA will be cautious in cutting interest rates going forward.

Wizard has led the way with a pre-emptive mortgage rate cut and the big boys are expected to follow suit. But will RBA cuts continue to be passed on in full down the track?

The latest independent inflation reading casts doubt on expectations of aggressive interest rate cutting by the RBA in the year ahead.