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ThinkTank Interest Rate Outlook Wk 27 2008

Mon, 2008-06-30 20:57 — Broker

The 30 day rate continued to close the gap with the cash rate and dropped 7 basis points this week to 7.5917%. The 90 day rate went lower over the last seven days but blew out again to end up precisely where it was his time last week at 7.8167%.

Fixed rates are down and range between 7.85%-8.06% over the One-Five Years, a drop of an average 15 basis points.

The first 2-3 weeks of July will be an interesting period. The local financial year starts afresh while the US and other major northern hemisphere markets start winding down for the summer holidays. The tone for the next quarter is likely to be set between now and the last week of July.

We are inclined to agree with recent comments made by AMP economist Shane Oliver. Expect a choppy and difficult September period before greater stability and forward momentum return in the last quarter of the year. But then with oil prices and inflation dancing about like Peter Garrett on stage in his Midnight Oil days, who really knows?




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