Little to go on yesterday with many markets still in holiday mode but the 12month swap rallied handsomely:
The only other data point of significance was Port Hedland shipping volumes for September which showed a sharp drop:
It’s looking a bit toppy but not enough to draw any conclusion.
I wondering if the RBA has picked the bottom in bulk commodity prices with its rate cut. No doubt it was the right decision with an income shock on the way but the recent Chinese data has me seeing a Q4 bottom in their economy, if we are not there already. There are still big falls in the iron ore contract price and the Australian trade deficit ahead but spot price shipments are now climbing and by early next year the deficit will be slimming again.
I suspect we will see another rate cut in November but I reckon those seeing more cuts in a sequence may be wrong, unless the iron ore price turns again, which I don’t expect for the short term.