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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, Commodities

Aside from some great World Cup football, the focus over the weekend has been on developments in Iraq. Geopolitical unrest escalated late last week and sentiment turned sour as a result. Tensions and factional fighting has risen in Iraq, pulling in Turkey and Iran, plus there was also talk of a re-escalation in the Ukraine.

Reports suggest that government forces are fighting back against militants in the north of Baghdad and the US has announced that it is sending an aircraft carrier and two ships carrying cruise missiles to the Persian Gulf. All this news turned most markets lower into the weekend.

Domestically, re-pricing in the short end of the yield curve has continued, with financial markets now pricing only a negligible 5% chance of a rate cut before year-end, but a full 25 basis point rate hike by September 2015 (refer chart below).

Source: Rural Bank

 

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