Australian Bond Exchange Weekly Update
15th November 2024
Key points
- Aussie unemployment holds steady
- Consumer confidences rises
- U.S. core inflation climbs
- What a falling copper price could mean for global growth
Global Cash Rates & Inflation
● The Reserve Bank of Australia (RBA) Cash Rate now sits at 4.35%pa and the annual inflation rate in the year to the September quarter is 2.8%.
● The US cash rate (policy rate) is currently between 4.50%-4.75pa and the annual inflation rate in the year to October is 2.6%.
● The Bank of England Bank Rate currently sits at 4.75%pa to fight an inflation rate of 1.7% in the year to September.
● The European Central Bank Cash Rate (deposit facility) is 3.25%pa to fight an annual inflation rate of 2% in the year to October.
Aussie Unemployment Holds Steady as Consumer Confidence Rises
The Australian unemployment rate held steady at 4.1% in October, a sign of ongoing stability in the job market despite softening economic conditions.
At the same time, separate data revealed a notable boost in consumer confidence, which climbed to a 2½-year high. This increase in optimism suggests that Australians are feeling more secure about their financial outlook and economic conditions.
Although rate cuts are not anticipated until early next year, it appears that many individuals are choosing to look beyond the immediate challenges.
Overall, our view is that this environment remains advantageous for fixed-income investors, with elevated yields on bonds and other fixed-income assets providing desirable risk adjusted returns.
To see our available offerings, speak with an advisor at the Australian Bond Exchange today.
U.S. Core Inflation Climbs
Core inflation in the U.S., which excludes food and energy cost, increased by 0.3% while headline inflation increased by 0.2%. On an annualised basis, the two measures increased to 3.6% and 2.6% respectively for the quarter.
While progress on inflation is slowing, the Federal Reserve is still widely expected to cut rates in December. However, the uncertainty surrounding Donald Trump’s election victory and his agenda of tax cuts and tariffs undeniably adds a layer of complexity, possibly limiting the extent of rate cuts.
What a Falling Copper Price Could Mean for Global Growth
Copper, a key material in construction, manufacturing, and technology, is often viewed as a barometer for the health of industrial economies—and its price has been declining sharply.
This decline raises concerns about the prospects for a global economic recovery, which has already been hindered by high interest rates, potentially delaying the recovery further.
In this uncertain environment, caution is advised, and investors seeking stability may wish to consider allocating to fixed income for greater certainty.
Week Ahead
- UK inflation
- Euro Area inflation
- Australia PMI data
*Data accurate as at 15.11.2024
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