We’ve had a busy week with a range of offshore uncertainties from Italian politics, North Korea’s tantrum, US-China trade talks, Brexit developments, Iran sanctions and let’s not forget the royal wedding in the press on a daily basis. Despite all this geopolitical tension (apart from the royal wedding), market moves have been relatively subdued in Australia reflecting a continued wait and see mode by investors.
We have had some impact (rise) to local yields which reacted to a rise in US long term interest rates to an eight-year high as well as a stronger US dollar which kept a lid on the Aussie last week.
Locally, the latest RBA board minutes released last week seem to imply an even greater patience with the current stance of “no change to monetary policy”. In describing the current policy as “a source of stability and confidence”, the RBA is clearly contrasting its policy with that of the US Federal Reserve’s tightening cycle, but the RBA feels no embarrassment with its divergent stance.