Avid readers of The van Eyk View and our other publications know all too well the importance we give to inflation regimes as predictors of future returns. In fact, in the Interactive Asset Allocation Model recently made available on our online research portal iRate, the likelihood attributed to each of four different inflation scenarios (Functional [...]
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Apr
2012
Europe is continuing to cause shockwaves in financial markets with increasing resistance to fiscal austerity (with the temporary collapse of the Dutch coalition Government and the Socialist candidate’s victory in the first round French Presidential elections), more soft economic data including 24.4% Spanish unemployment and Standard & Poor’s downgrading of Spain. However, Europe will probably [...]
continue readingThe Consumer Price Index – the main measure of inflation in Australia – rose by 0.1 per cent in the March quarter, well below expectations centred on a 0.6 per cent rise in prices. In seasonally adjusted terms the CPI fell by 0.2 per cent. The CPI stands just 1.6 per cent higher than a [...]
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Apr
2012
Yields on Australian 10-year bonds have fallen to the lowest levels since the early 1950s. This week, Aussie 10-year government bond yields hit 3.648 per cent – the lowest yield since June 1951 when yields averaged 3.51 per cent, according to Reserve Bank data. Australian 3 year bonds also ease. Yields on 3-year bonds hit [...]
continue readingFor some time our view has been that Australian interest rates need to be lower. The Reserve Bank at its last meeting seemed to be finally coming around to this view, but preferred to wait for the release of March quarter inflation data. Well the inflation data is now out and it’s far weaker than [...]
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Apr
2012
The broad measure of business inflation – the producer price index (PPI), or final stage prices, – fell by 0.3 per cent in the March quarter – marking the biggest quarterly fall since December 2009. The result was well below forecasts for a 0.5 per cent rise. The fall in inflation was largely driven by [...]
continue readingEurope remains a source of consternation, but there have been some positive developments. News that Italy is delaying its return to budget surplus by one year, Spanish banks’ bad loans had increased to 8% of assets and the prospect of a socialist president in France all weighed on investor sentiment. But against this there was [...]
continue readingEach quarter CommSec attempts to find out how the states and territories are performing by analysing eight key indicators: economic growth; retail spending; equipment investment; unemployment, construction work done; population growth; housing finance and dwelling commencements. Just as the Reserve Bank uses decade averages to determine the level of “normal” interest rates; we have done [...]
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Apr
2012
The latest Reserve Bank Board minutes confirms that a rate cut is on the cards for next month provided inflation remains in check. “Slower growth in demand could be expected to result in a more moderate inflation outcome, then a case could be made for a further easing of monetary policy. The Board would have [...]
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Apr
2012
After strong share market gains in the March quarter a correction or rough patch was inevitable and we now may have entered just that, particularly with the Euro-zone debt crisis making a bit of a comeback. Spain and Italy certainly remain high risk and further volatility is likely. However, better share valuations, easier global monetary [...]
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