Bonds/Interest Rates

Country wide shares traded as much as 20% higher in Wednesday’s aftermarket on news of the BA stake. However both Countrywide and the market closed flat last night.

Stocks went up and bonds went down last night as a seized credit market began to see the first signs of movement.

If fallout from the current global adjustment of risk perception becomes permanent, how would that affect the economy? Commonwealth Research has some numbers.

Panic gave way to simple anxiety on Wall Street last night as the only news of any consequence was a fall in the oil price.

Mixed, with a lack of conviction, is the way last night’s trading US stock markets could be described as the Dow recovered early losses to finish higher. We are now playing a waiting game.

Comparisons with 1998, and a quick look at the upcoming mortgage reset situation in the US, suggest today’s rally hasn’t necessarily marked a bottom.

This week is virtually devoid of data from the US, which might be a good thing, while Australia is not laden either, but this is Week one of the two busiest results weeks.

The US Fed back-flipped on Friday, declaring an appreciable downside risk to the US economy. In cutting its discount rate, the Fed sparked a 233 point rally in the Dow.

The RBA is closely watching world economic developments, but at this stage sees nothing to change the overall inflationary story.

In an extraordinary night that followed an extraordinary day, commodity prices collapsed, US bond yields were clipped, the yen accelerated its buyback and Wall Street found a bottom.