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Turmoil in global bonds signals three more rate rises

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Australian households are bracing for up to three additional cash rate increases by the Reserve Bank of Australia (RBA), following turmoil in global bond markets that has sparked speculation of the central bank’s involvement in inflation-taming efforts similar to the US Federal Reserve.

Only three days after the RBA left the cash rate unchanged at 4.1 percent, robust US labor market data prompted investors to increase bets on the need for further monetary tightening in the world’s largest economy. This triggered a significant sell-off in equities and put pressure on the Australian dollar.

Australian shares plunged 1.7 percent to a three-month low of 7042.3 points on Friday, reflecting concerns about central banks, including the RBA, being compelled to raise rates in response to external developments.

While Australian and US interest rates have not always moved in tandem, similar economic fundamentals between the two countries will likely prompt the RBA to react to offshore trends. The prospect of a more hawkish Federal Reserve places pressure on the RBA to adopt a similar stance. Market expectations currently indicate a 50 percent probability of a rate hike in August, with two rate hikes priced in by year-end.

Aussie dollar

The depreciation of the Australian dollar, reaching a low of US66.01¢, may further decline as investors seek higher-yielding currencies like the US dollar. A weaker currency raises concerns about increased costs of imported goods, including petrol, machinery, and construction materials.

This scenario could prompt the RBA to resume its aggressive monetary tightening cycle, which has already seen the cash rate rise by 4 percentage points since May 2022. The removal of the reference to “keeping the economy on an even keel” in the RBA’s policy statement suggests Governor Philip Lowe is preparing for a more significant economic downturn.

Bond yields

The surge in global bond yields following robust US jobs data has led bond traders to price in a new peak RBA cash rate of 4.71 percent. Previously, markets had anticipated a peak of 4.6 percent. The market reaction reflects the expectation of three additional rate increases, exceeding the predictions of most market economists.

Similar trends are observed globally, with swap contracts in the US and UK signaling expectations of interest rate hikes. The Bank of England may raise its benchmark rate to levels last seen in 1998, with warnings of high inflation. JPMorgan has even suggested a potential rate of 7 percent.

The actions of central banks worldwide, including the RBA, are closely tied to the anticipated US economic performance, as they hope to avoid the burden of taking independent measures to combat inflation.

The uncertain economic landscape calls for vigilance as households in Australia and beyond brace for potential interest rate increases that could impact borrowing costs and overall economic conditions.

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Money

Apple Music’s controversial top 10 albums of all time

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Apple Music has released its highly anticipated “100 Best Albums of All Time” list, with the top 10 rankings causing a bittersweet symphony of destruction for some music lovers.

The list was curated by a panel of experts and based on various factors including cultural impact, critical acclaim, and commercial success, with the aim to celebrate the most influential and timeless albums across genres.

As reported by the official Apple Music Newsroom blog post, the top ten best albums of all time are the following:

10. Lemonade (2016), Beyoncé

9. Nevermind (1991), Nirvana 

8. Back to Black (2006), Amy Winehouse

7. good kid, m.A.A.d city (2012), Kendrick Lamar

6. Songs in the Key of Life (1976), Stevie Wonder

5. Blonde (2016), Frank Ocean

4. Purple Rain (1984), Prince & The Revolution

3. Abbey Road (1969), The Beatles

2. Thriller (1982), Michael Jackson

1. The Miseducation of Lauryn Hill (1998), Lauryn Hill

In other news, Apple recently became the first company to hit a $3 trillion stock market value, before falling just below that milestone, as reported by Reuters.

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How can we support a more eco-friendly future?

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With a $23 million commitment for a national circular economy and $1.3 million for net zero transition guidance, Australia is advancing towards sustainability.

Funding Futures is a weekly TV show on Ticker, hosted by Mike Loder and Steven Maarbani from Venture Crowd, that delves into the dynamic and evolving world of venture crowd-raising.

In this episode, we are joined by Cameron Hope, Founder of CEO of Hirehood. #trends #funding futures

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The integral step to entering the property market

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In the debate surrounding housing affordability, a divergence emerges between media portrayals and stark realities. While the crisis is often depicted as insurmountable, critics argue that individuals tend to blame external factors rather than taking personal responsibility.

Despite challenges, advocates urge a shift from despair to possibility, emphasizing personal agency and proactive pursuit of homeownership goals. Thus, while acknowledging the hurdles, reframing the discourse empowers individuals to navigate the housing market with resilience and determination, making the dream of owning a home a tangible reality for those willing to seize it. #Trending #Featured

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