RBA Speech / NAB Qtly Business Survey

RBA SPEECH
There are a number of headline grabbing comments this morning about interest rates rising by Christmas and in my mind that's all they are. I've listened to the RBA Governor's speech (http://www.rba.gov.au/) and he acknowledged the possibility that house prices may rise if there isn't an increase in housing stock and that at some point inflation will rise. He also states that rates will go up "in due course". Well we all know that but some journalists suggesting this might be as soon as Christmas is their own sensationalist interpretation.

It's clear however that with the language he was using there would have to be something very dramatic take place to cause them to ease again now. I've given up my suggestion therefore that there might be another easing. The Governor also acknowledged however that inflation will continue to drop and unemployment continue to rise for the moment. We still have some way to go and the UK and USA are still suffering. China however are our saving grace.

The markets have sold off - particularly in the three year area and there could be some attractive 1 and 2 year rates around soon.

NAB Qtly Business Survey
Adding to the note of confidence was the NAB Qtly Business Survey. This pointed to a sharp jump in business confidence in the 2nd qtr by 20 points to levels last seen just before the Lehman collapse. Business conditions were also significantly better due to improved trading and profit conditions. They are both still negative but getting close to positive.