The pincer tightens

You will perhaps be unsurprised to hear that the twin measures of Australian vulnerability both deteriorated overnight. On the housing side of the economy, bank CDS prices rose another 10 pips or so and are clearly at levels associated with closed markets for Australian bank bonds, approaching 190bps:

Gotta love that Budget surplus.

Except, maybe there won’t be one because on the other half of the economy, the iron ore price continued its correction, down 0.6% to $135.10 (white). Shanghai rebar (green) fell roughly the same and is a hair’s breadth from plumbing  a new low in its post-asset bust price. 12m months ore futures (yellow) were up a tick:

Thermal also fell, below $98.

The June rates meeting is very much live.

Houses and Holes
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Comments

      • Aristophrenia

        Glut of steel in Chinese mills,
        – “they do not want to buy any more Ore no matter how cheap”,

        collapsing housing market

        – “they do not want to buy any more Ore no matter how cheap”,
        no further infrastructure stimulus

        – “they do not want to buy any more Ore no matter how cheap”

  1. Diogenes the CynicMEMBER

    Hard hats on boys!

    When do the ratings agencies pull the trigger on a downgrade of Aussie debt? 3rd quarter 2012?

  2. And if you need further proof of the coming slide in Australia’s terms of trade, just take a look at BHP and RIO’s share prices and remember that BHP just canned $80 billion worth of future investment