Weekly Market Commodity Report week commencing 7th Nov

It’s all Greek to me!

And it is becoming harder and harder to keep up with the developments in the Euro zone. Much of news out each night was out of date within 24 hours, as the Greek Prime Minister, his government and other European leaders tied themselves in knots on the issues of a Euro referendum, bailout funding, Papandreou’s future and precisely how to run that increasingly dysfunctional country. Market price action last week was dominated by these events which caused large swings in sentiment.

Locally, last week’s cut in the RBA cash rate barely moved the market (as it was somewhat expected and priced in already).

After last week’s downward revisions by the RBA in its Statement on Monetary Policy, economic growth (GDP) is now expected to remain around trend and inflation at the mid point of their target range suggesting that the RBA is in no hurry to cut rates again. It goes without saying that the European debt crisis remains the biggest risk to this outlook.

The RBA assumes that Europe will avert a “disaster”, albeit with “bouts of considerable uncertainty and volatility”.

That said, if we see another benign CPI number for the December quarter (out in late January), there is scope for the RBA to reduce rates again without threatening their inflation target.

This week’s Treasury Commentary is available to view. Click here.

Regards

_____________________________________________________________

Rudy Boeff

Treasurer | Rural Bank Limited

T (08) 8425 4914 | M 0439 500 180 | F (08) 8211 9014

Level 1, 27 Currie Street, Adelaide  SA  5000 | GPO Box 551, Adelaide,  SA  5001