Bonds/Interest Rates

Australia’s unemployment rate is now at a 33-year low and the potential for this to flow through to higher wages and therefore inflation means interest rates appear certain to go higher.

Inflation expectations are now at a two year high in Australia and Westpac economists believe the next official data release is likely to surprise on the upside.

Wall Street managed to convince itself last night that the month-old Fed minutes foretold of further rate cuts ahead. Aye caramba.

The US dollar continued its fight back rally against major currencies last night, sending oil, gold and metals south. The Dow closed slightly lower.

Stronger than expected labour market data in the US have opened the door to further share market gains. On Tuesday Alcoa kicks off the Q2 results season. New record highs, here we come?

Australian retail trade data for August came in above market expectations, leading economists to suggest the case for an RBA rate hike in November is strengthening.

The British banking system is still in turmoil as cheaper and less overt ECB funds are being sought.

The RBA’s target cash rate remains at 6.50%.

Stock markets finished mixed as housing woes continued and gold took a tumble.

TD Securities sees scope for the Australian dollar to trade at parity or beyond against the US dollar, with Danske Bank expecting the US Dollar to remain weak while the Fed are alone in cutting rates.