Economic and market news
The Reserve Bank of Australia decided to hold its official interest steady at 4.35 per cent at its meeting yesterday. The statement that accompanied the decision highlighted the upside risks to the outlook, flagging a future rise in rates is not off the table. In particular, it noted that the latest numbers demonstrate inflation is proving persistent, having fallen very little over the past year.
New data show that annual headline inflation accelerated in the June quarter to 3.8 per cent, up from 3.6 per cent in the first three months of the year. In the quarter, price rises held at 1 per cent. This was the first annual inflation increase in more than two years. However, underlying inflation eased slightly to 3.9 per cent from the 4 per cent experienced in the previous period. This was broadly in line with forecasts by the RBA and was taken by markets and commentators as giving the central bank some breathing space to hold official rates for some while longer. It was suggested that the clear evidence that the disinflation process has stalled, and the ongoing acceleration in services inflation (4.5 per cent up from 4.3 per cent), will be a worry for policymakers.
Meanwhile, in the United States, the official policy rate was held steady, but the Chair of the Federal Reserve indicated strongly that a cut in September is 'on the table' if inflation, growth and job market conditions continue to soften along their current path.
This week also saw the release of new jobs data in the United States that were weaker than expected. This, and comments by the Fed Chair, raised market fears about a possible recession in the US, causing a global sell off.
In the United Kingdom, having seen inflation fall back to target, the Bank of England made its first interest rate cut of this cycle, to 5 per cent from 5.25 per cent. The statement accompanying the decision made clear that there are still concerns about the persistence of underlying inflation, especially as the economy accelerates.
Australian indices
ASX 200: Fell 3.43 per cent over the week to close at 7680.6 points on Tuesday.
All Ordinaries: Fell 3.50 per cent in the period to close at 7890.1 points on Tuesday.
Government Bonds
Government Bond Yields (Source: Bloomberg)
|
NAME |
COUPON |
PRICE |
YIELD |
1 DAY |
1 MONTH |
1 YEAR |
|
GTAUD2Y:GOV Australia Bond 2 Year Yield |
4.25
|
100.80 |
3.75% |
-4 |
-48 |
-16 |
|
GTAUD5Y:GOV Australia Bond 5 Year Yield |
3.25 |
98.18 |
3.67% |
-3 |
-48 |
-24 |
|
GTAUD10Y:GOV Australia Bond 10 Year Yield |
3.75 |
97.83 |
4.02% |
-3 |
-38 |
-17 |
|
GTAUD15Y:GOV Australia Bond 15 Year Yield |
3.25 |
89.04 |
4.24% |
-3 |
-36 |
-17 |
Reserve Bank of Australia (Source:RBA)
|
RBA CASH RATE TARGET (RBATCTR:IND) CURRENT (per cent) |
MOST RECENT DECISION (percentage points) |
MOST RECENT CHANGE (percentage points) |
1 YEAR PRIOR (per cent) |
|
4.35 |
+0 (6 August 2024) |
+0.25 (7 November 2023) |
4.10 |
Currencies(source:RBA)
As at the close on 6 August the AUD/USD had fallen another 0.69 per cent over the week, closing at 0.6511 on Tuesday. The AUD/RMB had also fallen, 2.23 per cent, in the period, closing at 4.6549 on Tuesday.
Venture Capital
Cardihab
Stoic investee Cardihab has released new guidelines and recommendations on the use of digital health in cardiovascular risk management. These guidelines emphasise the importance of a person-centred approach to secondary prevention for individuals with Acute Coronary Syndrome.
Property
In property news this week, the national auction clearance rate dipped below 70 per cent for the first time since early June. The 69.2 per cent outturn was down from 72.2 per cent last week. This was despite renewed confidence that the Reserve Bank of Australia might hold interest rates for the foreseeable future. The fall in the clearance rate was accompanied by a slight drop in auction volumes.
