Bonds/Interest Rates

There will be no immediate oil price relief from increased Saudi production, leaving the Fed with a difficult rate decision on Wednesday.

The Dow fell over 200 points on Friday as quadruple witching evoked significant volume on a weak bias. Oil bounced back over US$2 after Israel pulled it out and showed to Iran.

It was a case of oil up, Dow down on the current broken record that is Wall Street. A 130 point fall puts the March lows in sight.

The Dow fell over 100 after Goldman Sachs warned of more weakness in financials and the PPI provided food for thought.

The Dow closed slightly lower last night having fluctuated on a wild ride in the oil price.

The Dow rallied 165 points on Friday on yet another unremarkable CPI number, while oil slipped and Lehman returned from the grave.

RBA governor Glenn Stevens believes the commodity boom could potentially destabilise the Australian economy over the longer term. Higher inrterest rates remain very much on the agenda.

To hike or not to hike remains the main question for the RBA. Even though economic indicators are increasingly showing weakness is kicking in. Today’s May labour market data were weaker than expected.

The Westpac-MI Index of Consumer Sentiment has fallen to its lowest level since 1992, a decline seen as likely to keep the RBA on the sidelines with respect to interest rates.

The Dow finished as good as unchanged as inflation talk took the US dollar up, oil down some more and gold down a lot.