Rate jitters hit stocks

The dollar is happy:

And stocks are not, especially so given the big jump in overnight markets, yet the ASX200 is down half point and it’s wall to wall red with rate sensitive sectors leading:

Tech -.07%
Health – 0.3%
Consumer services -0.4%
Utilities -0.5%
Financials -0.6%
Materials -0.65%
Industrials – 0.7%
Consumer goods -0.8%
Telcos -0.85%
Oil and gas -0.94%

The CA1Y is still stuck at forecasting 14bps of hikes in the year ahead but the chart is looking increasingly bullish.

I maintain that the RBA will not hike this year but the brinkmanship is already working nicely and the bank will only need to offer hawkish tilt to its statement and these markets are going to run. Dollar up and stocks down.

I don’t expect any change today.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.