have we seen the bottom in crude oil prices?

It had to happen and here it is. The price of crude has risen after falling to USD 28 per barrel over the weekend. Brent crude is now trading at USD 32 a barrel; but it is too early to tell whether the increase was due to the higher demand of oil and energy following the big "snowzilla" blizzard conditions in the east coast of the US over the weekend. Sydneysiders got the joy of seeing the unleaded petrol fall below a dollar a litre; perfect timing for the Australia Day holiday period. However it is likely to go back above a dollar soon and so make hay while the sun shines and fill up. 

aussie bond rally to continue

With crude prices low and inflation expectations trending low, some analysts believe that the Aussie bond yields should be trending lower. Some analysts are predicting the yields to fall to 2.4% for the benchmark 10 year Commonwealth Bond. 

It is our view that the weak Chinese growth and inflation sitting at around 2% and trending at the lower end of the RBA target monetary policy band of between 2-3%, a rate cut is unlikely in 2016. At the longer end of the yield curve, the spread to US is a better indicator of the trend and with the US economy definitely showing strength, the Commonwealth 10 year bond yield will return values showing the spread to the US of around 90 basis points suggesting an yield of around 2.9% assuming the Aussie dollar is valued at around 70 US cents. 

market update

​Australia Cash rate
Australia 90 d bank bill (mid)
Australia 10 y bond
US 10y Govt bond
AUD/USD
AUD/EUR
AUD/JPY
AUD/CNY
ASX 200
S&P 500
Dow Jones
Shanghai Composite
Brent Crude(USD per BBL)
Gold Spot (USD per oz)

22 JAN 2016
2.00
2.27
2.73
2.05
0.7006
0.6466
82.61
4.6096
4966
1906
16093
2916
32.18
​1097

 15 JAN 2016
2.00
2.305
2.69
2.03
0.6948*
0.6384
81.82
4.5765
4851
1880
15988
2901
28.94
1090.7