Australian bond yields ended the week sharply lower on safe-haven buying.  Equity markets took a beating as financials begin to wobble.  Commodities provided a welcome reprieve.

Economic data
Domestic economic data was mixed with September quarter construction work rising a solid 2.2%. Private capital expenditure for the quarter fell by 3.9%, worse than market expectations. The RBA deputy governor gave an upbeat speech early in the week that reinforced market expectations of a rate rise.

In the US, the September quarter GDP was revised down to 2.8% from 3.5% (annualised).  Durable goods orders for October unexpectedly fell 0.6%. The housing sector showed renewed strength as new and existing home sales both recorded solid monthly rises.

In the UK September quarter GDP fell by 0.3% as the UK continues to lag the world recovery.        

Rates
Interest rates at the very short end of the yield curve rose slightly. In contrast, bond yields fell sharply on safe-haven buying. Two year government bond yields fell 0.14% to 4.30% and 10 year yields fell 0.18% to 5.21%.

US bond yields were lower on increased demand for safe-haven treasury securities with 90-day T-bills trading mid-week at 0%. Two-year treasury yields declined 0.04% and 10-year yields ended the week 0.16% lower.

Credit
There was little in the way of movement in credit market indices until the weakness of Friday. The Australian iTtraxx closed the week 10 basis points wider. The US CDX investment grade index was 4 basis points wider and high yield index 14 basis points.

The Australian Senate passed a bill to remove interest withholding tax on Commonwealth-issued debt, which will be a positive for commonwealth government bonds. Shockwaves were sent through the credit markets after an announcement from Dubai that a state owned corporation needed to restructure its debt repayments. Swap and cash bond credit spreads were sharply wider on this news.

Primary market issuance was strong, with three local corporate deals pricing: AMP Wholesale Office Trust, Caterpillar and VW Finance. 

Other Markets
The Australian dollar was off sharply from mid-week highs against the US dollar as investors begin to unwind the popular carry trade. The A$ finished the week down 0.8% at US$0.906.

Profit-taking, growing US inventory levels and slower-than-expected GDP growth weighed on oil prices and WTI crude oil finished the week down US$0.67 at US$76.05/barrel. Gold rose 2.6% over on further central bank buying and concerns about Dubai’s potential default. The CRB index rose 1.5%.

Equity markets tumbled amid Dubai fears.  The US S&P 500 finished the week unchanged, but 1.7% down from mid-week highs. The local S&P/ASX 200 was off 2.4% while Japan was belted down 4.4%.

The week ahead
The Australian calendar picks up this week with Monday’s September quarter company profits and private sector credit releases. The RBA announces its cash rate decision on Tuesday.  Building approvals and retail sales are also released.

In the US, the key release is Friday’s non-farm payrolls. Releases ahead of payrolls include ISM manufacturing data, construction spending and the Fed’s Beige Book.

Australian short rates point to another 0.25% rate hike in December. A G20 commitment to keep government aid flowing boosted equity, credit and commodity markets.

Economic data
Domestic data continued to print on the strong side of expectations, supporting the RBA’s case for reining in its accommodative monetary policy. September housing finance rose 5.1%, the most in six months. Employment in October was up 24,500, with a 21,500 rise in part-time employment, but unemployment rose 0.1% to 5.8%. The NAB business confidence survey for October rose strongly. The Westpac Consumer confidence index, while still high, dipped 2.5% to 118.3.

The US calendar was quiet this week. Import prices were up 0.7%, assisted by a weaker US dollar. In the UK, the unemployment rate remained unchanged at 7.8%.

Rates
Strong domestic data pushed up shorter-dated bank bill yields. The market is now almost completely priced for a 0.25% December cash rate hike. Bond yields were subdued with little direction from the US. Two-year yields were unchanged at 4.67% and 10-year yields fell 0.06% to 5.56%.

The US Treasury’s record US$25 billion 10 year note auction met with strong investor demand and saw 10 year notes end the week 0.08% lower at 3.42%.

Credit
Credit markets tightened supported by strong equity markets.  The Australian Itraxx narrowed 10 basis points to 92. In the US, the CDX high yield index closed in 22 basis points to 673 while the Investment grade index narrowed 4 basis points to 99. The euro iTraxx index was in 3 basis points.

It was big week for primary market issuance with banks leading the charge. AA-rated ANZ issued A$1.25 billion of five‑year unguaranteed paper at 100 basis points over swap.  Westpac issued A$1.1 billion of five-year government guaranteed bonds at swap plus 30.  In a sign of forthcoming changes to APRA bank liquidity requirements, Westpac issued $1.4 billion of seven‑year unguaranteed paper at swap plus 130.   EIB issued A$1.5 billion of five‑year bonds at swap plus 25, the largest single tranche kangaroo transaction.

Other markets
The US dollar rallied marginally against the euro, but the pound gained 0.5% on Friday. The Australian dollar peaked at a 15‑month high against the US dollar after the release of strong Chinese industrial production and trade data. At the close the AUD/USD was up 1.3% to US$0.929.
Commodity markets were buoyed by positive comments from the G20 that they would maintain current economic stimulus measures. Spot gold finished at US$1,107/oz after hitting an intraday record high of US$1123/oz. The CRB index climbed 1.5% to 401. Only crude oil failed to respond to the G20, dropping 1.4% to US$76.35.

Equity markets had a solid week after indications from the US Federal Reserve that it would keep rates at low levels. Solid Chinese economic data provided and added boost.  The S&P/ASX 200 finished the week up 2.4%, while the S&P 500 and FTSE 100 rose 2.3% and 3% respectively. The Nikkei was left behind, falling 0.2%.

The week ahead
A quiet week on the domestic calendar will see the release of the RBA board minutes and September quarter wages data.

It is a busier data week in the US with releases of retail sales, the producer price index (PPI), CPI, industrial production and employment data.

This week Inflation figures confirmed the case for an Australian rate rise. Meanwhile, both credit and equity markets were weak around the globe.

Economic data
Australian headline inflation for the September quarter came in very close to forecasts at 1%. Falling transportation and financial services prices in prior quarters mean that the headline inflation rate year on year is now down to 1.3%, but the Reserve Bank’s preferred measure, the trimmed mean, is still up at 3.2%, outside the bank’s 2-3% inflation target.

The US S&P/Case-Shiller house price index rose 1.2% in August, bringing the 12 month price change to -11.3%. While this was a little better than the market expected, September new home sales were released later in the week and, at 402,000, were almost 10% lower than forecasts.
Perhaps the biggest surprise of the week was US GDP which grew 3.5% in the September quarter, better than the expected 3.2% growth. The optimism this generated was dented on Friday by the 0.5% fall in consumer spending in September.

Rates
Interest rates at the very short end of the curve were up, pricing in upcoming cash rate hikes, but beyond six months, the market is becoming less bearish about the extent of future rate rises. The market-implied cash rate 12 months out closed 0.23% lower than it was a week ago.

Two-year government bonds rallied 0.23% and 10‑years rallied 0.16%, steepening the 3‑10 futures curve 11 basis points.

It was a volatile week for US rates and Treasury yields finished the week 0.11% lower.

Credit
As credit markets took their cue from weak equity markets, spreads widened. The CDX investment grade index was 9 basis points wider and high yield 63 basis points, while the euro investment iTraxx was 5 basis points wider. The Australian iTraxx index was unchanged on the week, but is likely to catch up with some widening following offshore weakness on Friday after the Australian close.

There was no new bond issuance in the domestic market.

Other markets
The US dollar staged something of a recovery, gaining 1.9% against the euro. The Australian dollar finished the week at US$0.915, a fall of 1.1%.
Oil prices showed some weakness mid-week, but finished almost unchanged. The WTI crude oil price fell back just below US$80 per barrel. The price of gold was down 1.4% to US$1,045/oz and the broad CRB index was stable.

Equity markets were down and the Australian market fared worse than most. The S&P/ASX 200 slipped 4.3%, while the S&P 500 fell 4%. The Nikkei 225 was down 2.4% and the UK’s FTSE 100 fell 3.8%.

The week ahead
As is traditional, the Reserve Bank has its November meeting on Melbourne Cup Day this Tuesday. Consensus is still for a 0.25% rate rise, although some view 0.50% as a possibility. The next day retail sales and building approvals figures are out.

The Fed also has a rate decision this week, but unlike in Australia, no-one expects to see a change in US rates.

Australian interest rates rose for another week  as the economy shows less and less resemblance to the US, UK and Europe. Equity markets around the world were volatile.

Economic data
The release of the October board minutes showed that the Reserve Bank’s rate hike earlier in the month had been the subject of extensive deliberation. While global economic prospects remain uncertain, the influence of “developments in Asia” ultimately tilted the argument in favour of a rate rise.

The Westpac Leading Index for August was up 1.1% for the month, bringing the annual growth rate to 1.7%, not too far below the long-term trend of 2.8%.

US housing starts were up 5% in September at 590,000, although this was slightly weaker than expected. Building permits also fell below forecasts, falling 1.2% to 573,000.

The US Fed Beige book noted “stabilisation or modest improvements” across the 12 Fed districts, but also pointed to weakness in the commercial real estate sector. The US leading indicators index was up 1% for September, narrowly beating expectations of 0.8%.

Following a meeting of European finance ministers, ECB President Jean-Claude Trichet warned of the dangers of exchange rate volatility, but said that he took seriously the US commitment to a strong dollar. Growth in the UK continues to look grim as GDP fell 0.4% for the September quarter, bringing the annual GDP change to -5.2%, well below forecasts for an annual fall of 4.6%.

Rates
The front end of the Australian curve rallied a little on a reduction in the estimated likelihood of a 50 basis point rate hike in November. Further out, the curve rates rose. Two-year government bond yields were up 0.11% and 10-year yields up 0.12%. The mid-part of the curve did not sell off as far, and the 3‑10 year futures curve steepened 5 basis points.

US long-end rates rose almost 0.1%, but the implied pricing of the Fed funds rate fell another 0.10%.

Credit
There was some weakness in credit markets over the week and the Australian iTraxx widened 3 basis points. AAA bonds were weaker, but BBB bonds managed to tighten around 9 basis points relative to Commonwealth government debt.

US and European credit indices had a quiet week.

The bond primary market saw the launch of a Downer EDI 4 year bond. Slated for $100 million, the BBB bond issue was then increased to $150 million and priced at 3.75% over swap.

Other markets
The momentum of the Australian dollar slowed a little, but it still managed a rise of 0.4% against the US dollar, finishing the week at US$0.925.

Oil prices rose again. The West Texas Intermediate (WTI) crude oil price finished the week over US$80, up 1.9%.

Share market performance continued to be a little rocky. The Australian S&P/ASX 200 was up 0.5% and the US S&P 500 was down 0.7%.

The week ahead
The Australian inflation figures released on Wednesday will be important for the Reserve Bank in determining monetary policy next month.
Further housing data is out in the US with the release of existing home sales figures and the S&P/Case Shiller house price index.

The Reserve Bank governor continues to convince the market that cash rates are heading higher. Meanwhile equity markets continue to rise. Oil prices were also up.

Economic data
While Tuesday’s NAB business confidence index declined 4 points, Wednesday’s Westpac-Melbourne Institute consumer confidence release saw the index rose 1.7%, reaching its highest level in over two years.

Reserve Bank Governor Glenn Stevens gave a speech in Perth on Thursday. Hawkish comments such as “interest rates need to be adjusted to a more normal setting” combined with the strength of consumer confidence the day before, led markets to price in a high probability of a 0.5% rate hike in November.

The October reading of the Investors Business Daily consumer confidence index was down 3.8% on the previous month. Retail sales fell 1.5% in September and, while this was somewhat better than forecasts for a 2.1% fall, the decline largely reversed the growth in sales in August.

US CPI for September was exactly in line with expectations, rising 0.2%, compared with 0.4% the month before. This brings the inflation rate for the year to -1.3%. Inflation excluding food and energy was also 0.2% for the month, but the rate for the year is positive at 1.5%. Industrial production for September rose 0.7%, beating expectations of a 0.2% rise. Since the “cash for clunkers” program was almost certainly a factor driving this figure, production may fall back in October.

Rates

Following Stevens’ comments, the market is now pricing in a cash rate of 5.38% in 12 months’ time, up 0.35% from the week before and up 0.78% from a month ago. The 3‑10 futures curve steepened 6.5 basis points. Two‑year government yields rose 0.29% and 10‑year yields rose 0.36%.

US short-end rates rallied in response to the weak economic data. The market is now implying a Fed funds rate 12 months from now of less than 1%, a fall of 0.43% over the week.

Credit
Credit performed well over the week. The Australian iTraxx  (series 12) rallied 11 basis points, while AAA-rated bonds spreads were largely unchanged and BBB‑rated bonds rallied an average of 11 basis points.

US CDX high-yield tightened 33 basis points. US CDX and euro iTraxx investment‑grade were both in 4 basis points.
Unlike recent weeks, the primary bond market was rather quiet, but an auto asset-backed deal was brought to market.

Other markets
The US dollar continued its decline, falling against all major currencies other than the Japanese yen. The Australian dollar finished the week up 0.71% at US$0.921.

Gold traded up and down in a 2% range, but finished the week unchanged at US$1,049/oz. Oil prices were very strong and the WTI crude oil spot price was up 9.4%.

US equities wobbled mid-week, but the S&P 500 managed to close up 1.9% despite falls on Friday. Australia’s S&P/ASX 200 was up 1.8%. The Nikkei 225 was up 2.4%. European markets were weaker and the UK’s FTSE 100 was only up 0.5% for the week.
The week ahead
The October minutes of the Reserve Bank board meeting are out and they will be closely scrutinised for hawkish sentiment. The Westpac leading index data for August is released on Tuesday, as is new motor vehicle sales data for September.

US housing starts for September will be released on Tuesday and the FHFA monthly house price index is out on Friday. The Federal Reserve will also be publishing its “Beige Book” commentary on economic conditions.

The Reserve Bank of Australia raised the cash rate 0.25% to 3.25% and employment was up. The Australian dollar rallied against the US dollar and equity markets were strong.

Economic data
The Reserve Bank of Australia surprised many market observers by raising the target case rate by 0.25% on Tuesday. Two days later, in an apparent vindication of the RBA move, the Bureau of Statistics reported a rise in employment for September of 40,600 when the median forecast was for a fall of 10,000. Coming on the heels of the surprisingly poor employment release in the US the week before, this highlighted the differing economic fortunes of Australia and the US.

Continuing its downward trend, US consumer credit fell by $12 billion in August. While $2 billion worse than expected, it was better than the $19 billion fall the month before. There was some small comfort in a 0.1% rise in US ICSC chain store sales for the 12 months to September, the first annual rise since August 2008. Initial jobless claims for the week ending October 4 also showed some improvement.

Retail sales in Europe were down 0.2%. While better than most forecasts, this continues a two‑year pattern of weakness.

Rates
Interest rates were up across the curve along with the cash rate. The two-year government bond yield was up 0.32% and the 10‑year was up 0.12%. The 3‑10 year futures spread flattened 16 basis points.

US rates traded up and down through the week. Two and 10‑year government yields closed up 0.04%.

Credit
Like equity markets, credit performed better than the week before. The Australian iTraxx series 12 rallied 21 basis points and series 11 was in 16 basis points. The US CDX high‑yield index tightened 40 basis points and investment‑grade was in 5 basis points. Euro iTraxx was in 7 basis points.

Australia saw further bond issuance during the week. The Bank of Scotland issued government‑guaranteed fixed and floating rate 15‑month bonds at a margin of 0.20% over swap. AAA-rated supra-national IBRD priced 5‑ and 10‑year bonds totalling $1.6 billion. Meanwhile CBA raised US$4 billion in debt in the US, issuing three‑, 5‑ and 10‑year bonds.

The arrears rate for Australian prime RMBS fell to 1.3% in July from 1.4% the month before, while arrears for sub-prime RMBS fell from 13.6% to 12.7%.

Other markets
It was another week of weakness for the US dollar, which fell 1.4% against the euro. This weakness combined with the RBA rate hike pushed the Australian dollar up a dramatic 5% against the US dollar to US$0.906.

Equity markets more than made up for the previous week’s falls. The S&P/ASX 200 was up 3.3% for the week, bringing it up 5.1% over the last month. The S&P 500 was up 4.5% and even the Nikkei 225 managed to rally 2.9%.

In a volatile week for oil prices, WTI crude finished up 2.5% at US$72 per barrel. Gold was strong throughout the week and finished up 5% at US$1,047/oz. The broad CRB commodity index rose 0.8%. The Baltic Dry index was up 14%.

The week ahead
In Australia this week, NAB will release its business conditions and business confidence indices. The Westpac-Melbourne Institute consumer confidence index is also out.

In the US, retail sales figures will be published on Wednesday and inflation figures follow on Thursday.

US equity investors seemed to decide that they had got ahead of themselves, and share prices around the world fell, while bonds rallied.

Economic data
In testimony to the Senate Economics References committee, Reserve Bank Governor Glenn Stevens described the Australian economic downturn as “mild”, saying the peak of the fiscal stimulus has probably passed. Underscoring the Governor’s sanguine view of the economy, the Treasurer Wayne Swan announced a 2008-09 budget deficit of $27.1 billion, $5 billion better than earlier forecasts.

Other domestic data was mixed. August retail sales were up 0.9%, against a forecast of 0.5%, but August building approvals were down 0.1%, when a 2.5% rise was expected.

The US S&P/Case-Shiller house price index rose 1.61% in July, the third consecutive monthly rise. This brings the yearly change down to a fall of 13.3%, better than the anticipated annual fall of 14.2%. News on the employment front was grimmer: non-farm payrolls were down 263,000 when median forecast was for a fall on 175,000. The unemployment rate nudged up from 9.7% to 9.8%.

Rates
Rates rose early in the week in an atmosphere of optimism about the economy. By mid-week, concerns about US equity valuations, particularly financials, soured this mood and rates began to fall again, and were down sharply after Thursday’s sell off on Wall St. Since the market still expects rate hikes in Australia, the long end of the curve rallied the hardest. The Australian 3‑10 year futures curve flattened 9.5 basis points.

Credit
Credit spreads drifted out through the week and, following the drop in equity markets overnight on Thursday, were sharply wider on Friday. The new series 12 of Australian iTraxx was 26 basis points wider.

It was another busy week in the domestic primary market. Rentenbank added $350 million to its 2014 line at 25 basis points over swap. ABN Amro issued a 15‑month floating rate note at 20 basis points over swap. EIB added $550 million to its 2014 issue, bringing it to $1.35 billion and ING brought a $600 million government-guaranteed bond to the market at 20 basis points over swap.

The Australian Office of Financial Management launched the first inflation-linked bond from the Commonwealth since 2003. The $4 billion issue was syndicated at a real yield of 3.04%

Other markets
The US led world equity markets down. The US S&P 500 fell 1.8%, while Australia’s S&P/ASX 200 was down 2.4%. Japan’s Nikkei 225 fell the furthest, ending the week down 5.2%.

While the euro and the pound both fell against the US dollar, the Australian dollar finished the week at US$0.870, up fractionally on the week.

Oil more than regained ground from the falls of prior weeks and WTI crude finished up 7.5% on the week and 4.1% on the month at US$70.82. Gold was up slightly to US$1000/oz.

The week ahead
The Reserve Bank cash rate is announced on Tuesday, but most commentators do not expect a rate hike yet. ANZ job ad figures for September were released on the Monday public holiday and were up 4.4%. This will be followed by official employment figures on Thursday.

It will be quiet week for data in the US.

In a week of relatively little data, there was weakness in US existing home sales and durable goods orders. Equities were weak and interest rates rallied.

Economic data
The RBA released its semi-annual Financial Stability Review. Setting a far more positive tone than that of the March review, it pointed to recovering confidence, dissipation of extreme risk aversion and the resilience of Australia’s financial system.

Australian new motor vehicle sales for August were up 0.3%. This does not reverse the 6.9% fall in July, but sales are almost back to levels prior to the jump at the end of financial year.

US leading indicators rose by 0.6% in August, marking the fifth consecutive gain, although it was slightly below expectations of 0.7%. Existing home sales for August confounded the market by falling 2.7% (to 5.1 million), when forecasts were for a 2.1% rise.  New home sales were closer to forecasts. Durable goods orders also disappointed, falling 2.4% in August against forecasts for a 0.4% rise. A big factor was the fall in civilian aircraft orders. Excluding transportation, orders were flat, against a forecast of up 1%.

As expected, the FOMC left the Fed funds target unchanged.

Japan’s trade surplus for August was a little above forecasts at 235 billion yen (A$3 billion). Export volumes were up 1.7% for the month, but still down 25.3% year on year.

Rates
While the Financial Stability Review continued the theme from the RBA of cautious optimism, there was little change in market expectations for rate hikes. Further out the curve, rates rallied late in the week. The two‑year and 10‑year government bond yields both fell 0.05%.
Interest rate activity in the US was concentrated at the long end of the curve. Two‑year treasury yields were down only 0.01% but 10‑year yields rallied 0.15%.

Credit
The Australian iTraxx rolled to the new series 12 and Fairfax fell out of the index, replaced by Coca-Cola Amatil. The spread difference of around 280 basis points between the two credits lowered the index about 11 basis points, helping it to a post crisis low of 91 basis points on Wednesday.

Credit was strong mid-week, but then softened into Friday. The US CDX investment grade index was in 3 basis points, the CDX high yield in 4 basis points. The euro iTraxx was essentially unchanged on the week.

Unlike recent weeks, there was nothing of note in the way of bond issuance during the week, due in part to the imminent year end for three of the four major banks.

Other markets
It has been another tough week for the pound, which fell 2.1% against the US dollar. The Australian dollar nudged back down below US$0.87, a fall of 0.1% for the week.

Oil prices fell sharply in the second half of the week. At US$65.87 per barrel, WTI crude was down 8.8% for the week.
Equity markets gave back some ground. The US S&P 500 was down 2.2% and the FTSE down 1.8%. The Australian market managed a positive return, up 0.4%.

The week ahead
Australian retail sales, private sector credit and building approvals data are all released on Wednesday. The TD Securities inflation gauge is out at the end of the week.

The US sees the release of the S&P/Case-Shiller home price index on Tuesday. At the end of the week, non-farm payrolls and unemployment figures are published.

First round-up of the week...that means I'll be busy this afternoon and Monday morning. I need to be a bit more disciplined about doing this each day.

Economic Data

In the US, sales of existing homes fell in August, down 2.7% to 5.1 million (annualised and seasonally adjusted). This was the first fall since March and was a long way short of expectations for a 2.1% rise.

The Reserve Bank of Australia released its Financial Stability Review yesterday, which painted a far rosier view of Australian economic conditions than in the last review in March this year.

Rates

Australian yields fell slightly: 2 year government bonds down 2 basis points (0.02%), 10 year down 6 bps, flattening the 3-10 year futures curve by 3 bps.

US rates also fell: 2 year down 2 bps and 10 year down 4 bps.

Other Markets

The UK pound is taking a pounding. It was down 1.5% against both the US dollar and the Australian dollar. The Australian dollar is now buying more than 54 pence, a record high since shortly after the Australian dollar was floated (December 1983).

US S&P 500 down almost 1% overnight. Australian sharemarket was weak yesterday too, falling 0.7%. It is down further today.

Crude oil took a sharp fall. WTI crude prices were down to $65.75, a fall of over 4%.

The sport of Reserve Bank tea-leaf reading continues in Australia, with rate hike expectations receding slightly. Meanwhile, equities continue to perform well in most parts of the world.

Economic data
The Westpac leading index was up 1.1% for the month of July, but this still leaves the annual figure at -1.8%, well below the long-term trend of 2.5%.

In its September board meeting minutes, the Reserve Bank of Australia (RBA) reiterated that it will “in due course need to adopt a less expansionary policy stance”. There is scant sign of an October rate rise and some analysts expect the RBA to hold off until early 2010.

The US University of Michigan consumer confidence survey was stronger than expected and Federal Reserve Chairman Ben Bernanke observed that “from a technical perspective the recession is very likely over”, but cautioned conditions would remain weak for some time. As expected, the CPI excluding food and energy was up 0.1% for August (1.4% year-on-year).

Having generated $1.2 billion in participation fees without having to make any payouts, the US Treasury allowed its money market fund guarantee program to expire.

The Baltic Dry Index of cargo shipping freight costs was down 4.5%, amid UK press reports of “ghost fleets” of empty tankers that questioned the strength of the “green shoots”. The index is now back down to May 2009 levels.

Rates
While it was a good week for risk assets, interest rates were nudging upwards. Australian markets are pricing in rate hikes of 1.74% (which would bring the cash rate to 4.74%) over the next 12 months, up from 1.62% a week earlier.

US Treasuries also underperformed: two‑year Treasuries were 0.09% higher in yield and 10-year 0.12% higher.

Credit
Credit is back to performing convincingly again. The Australian iTraxx tightened 8 basis points to 116. Gains on the euro iTraxx and US investment grade CDX were more modest, but the CDX high yield was in 67 basis points to 656.

NSW Treasury Corporation confirmed that it would be making use of the Commonwealth government guarantee for its bond issuance. Heritage Building Society launched a $30 million 10‑year/non-call five‑year subordinated debt issue.

Other markets
Crude oil rose sharply in the week, before slowing to close up 4.0% at US$72 per barrel. Gold peaked at $1024 overnight on Thursday, but finished the week at $1014. The CRB commodity index was down 1.5% on the week.

The US dollar continued to slide during the week against both the Australian dollar and the euro, but staged a minor recovery on Friday. The A$ finished the week up 0.6% at US$0.870. But the pound fared even worse than the US$, falling 2.0% against the US$ and 2.7% against the A$.

Most equity markets continued to perform, especially early in the week. The S&P/ASX 200 was up 2.1% and the US S&P 500 was up 2.5%. The Nikkei was an exception, falling 0.7%.

The week ahead
New motor vehicle sales are released on Monday in Australia, which will be compared to July’s fall of 7%. On Thursday, the RBA publish its Financial Stability Review.

The US Richmond Fed September manufacturing index is released on Tuesday. Federal Housing Finance Agency home price data is released on Wednesday and home sales figures are out on Friday. The FOMC rate decision is announced on Thursday, but no change is expected.