Bonds/Interest Rates

Further weak economic data suggest the Australian economy is close to contracting, with Stephen Koukoulas at TD Securities seeing scope for a rate cutting cycle to begin before the end of the year.

The Dow fell 166 points last night as oil closed above US$143 and Merrill Lynch suggested General Motors could go bankrupt.

Australia’s retail sales numbers for May were far stronger than the market had expected, leading economist to question whether or not the RBA will feel the need to move again on rates.

The Fed is banking on US inflation eventually falling due to economic weakness, but Morgan Stanley warns it may take longer than hoped. There are also implications for Australia.

A not-so-bad sales result for General Motors turned around a weak Wall Street last night. The Dow closed up 32.

The RBA has clearly become more concerned about inflation, but still anticipates a fall ahead.

As expected, the RBA has left its cash rate unchanged at 7.25%.

The first half came to an end last night with oil and the Dow barely changed.

The TD Securities-Melbourne Institute Inflation Gauge shows higher fuel and rent prices are keeping the pressure on inflation, meaning interest rates may yet go higher.

The world is preparing for an European rate hike as the US Treasury secretary makes a mercy dash to Europe.