8th November 2024
Key points
- Trump returns to the White House
- RBA holds rates steady
- Federal Reserve cuts interest rates again
- Bank of England cuts rates
- Australia balance of trade
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 September is 2.4%.
● 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.
Donald Trump’s return to the White House is still being digested by financial markets, but we’ve already seen Treasury yields spike with the U.S. 10-Year climbing to 4.33%pa (at the time of writing) as investors brace for potentially higher growth and inflation.
Equities have also risen following the election result, with anticipated tax cuts likely to boost corporate profits. This can be seen as a constructive development for many U.S. companies, including those linked to the Australian Bond Exchange’s fixed-income offerings.
Just this week, we announced the launch of our latest credit-linked security for The Goodyear Tire and Rubber Company, a NASDAQ-listed American multinational manufacturer of tires.
We’re pleased to report that demand has been stronger than expected, with the deal being fully subscribed. This underscores the importance of registering interest early to avoid disappointment.
For more information regarding our available opportunities, speak to an adviser today.
RBA Holds Rates Steady
The Reserve Bank of Australia (RBA) held the cash rate steady once again 4.35% p.a., pushing the central bank further towards the back of the rate-setting pack.
The decision reflects the RBA’s caution amid ongoing inflation concerns which remains elevated and in the upper range of the 2-3% target band.
Federal Reserve Cuts Interest Rates Again
The U.S. central bank reduced the federal funds rate by 0.25 percentage points this week, signalling a continued pivot from fighting inflation towards supporting economic stability and growth.
The decision closely follows Donald Trump’s stunning election victory, with Republicans likely to secure majorities in both Congress and the House of Representatives.
This will likely pave the way for many of Trump’s economic policies including tax cuts and tariffs, which are widely anticipated to be inflationary.
Bank of England Cuts Rates
The Bank of England cut interest rates on November 7, 2024, by 0.25 percentage points to 4.75% p.a.. This move marks its second cut this year, following a reduction in August.
Inflation in the UK has sharply decreased from its 2022 peak of 11% to under 2%. However, the Bank of England is expected to maintain a cautious approach in future rate adjustments, balancing inflation control with economic stability.
British rate setters will also undoubtedly be keeping an eye on the economic policies of the Trump administration which are expected to inflationary in nature and could have implications for monetary policy in the U.S. and abroad.
Week Ahead
- Australian consumer/business confidence
- US inflation data
- US retail sales data
*Data accurate as at 08.11.2024
Disclaimer: This document has been prepared by ABE Distribution Pty. Ltd ACN 673 177 912 Corporate Authorised Representative 1307088 (“ABE”) and is of a general nature only. It was prepared without considering your financial needs, circumstances and objectives. Before investing in a fixed-interest product with ABE, you should consider whether it is appropriate for your circumstances and review the relevant terms and conditions. This document contains links to other third-party websites, some of which require a subscription to read. Such links are for your convenience only, and ABE does not recommend or endorse these third-party sites.. No representation or warranty is made as to the accuracy, completeness or reliability of any estimates, opinions, conclusions, or other information contained in the content. The content may contain certain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors, many of which are beyond our control. To the maximum extent permitted by law ABE disclaims all liability and responsibility for any direct or indirect loss or damage that you may suffer as a result of relying on anything in this content. Past performance is not an indication of future performance