Am report of 8th April 15

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Yesterday’s rate cut disappointment here in Australia was probably the most interesting thing out of the last 24hrs with European markets responding to the latest Greek headlines (zzzzzzz), the US trading pretty tight ranges in most asset classes but otherwise, little else going on…..

In a rare win for the economist’s prediction record the RBA held fire yesterday, leaving rates and equities markets to wonder why they had whipped themselves into such a buying frenzy ahead of the announcement. In fairness though, equities had run so hard that the ~85pt high to low decline in the ASX200 post the release was barely noticeable if you take a step back from the minute by minute trading. Overnight the SPI also went back into outperform mode in the face of the ongoing iron ore calamity, giving a very clear indication that investors here remain willing and able to buy yield……at any price.

Offshore the lack of conviction in US markets was notable with small moves and a mild risk-off tone –equities closing on session lows and the long end of the rate curve bid. European equities did have a really good session, helped by another round of good data and news that the Greeks would be paying all its bills this month (ignoring the fact they will run out of cash in May). This had some follow through in bond markets there as well with Greek bonds bid, helping yields in the rest of the periphery go lower as well…..the yields on the extreme short end of Spanish debt going negative overnight. That’s right, Spain….negative.

In Fx AUD obviously caught a bid after the rate news, tagging a 0.7710 high but in keeping with recent form it was knocked on the head quickly, finishing at 0.7635. Otherwise the dollar was back on a charge with the rest of the G10 on the ropes and not even a sympathy bid for NZD evident….

Data wise the BoJ’s usual monthly pep-talk to the financial markets is scheduled for some time today (usually 1200ish Sydney time) and then tonight there is a bunch of second tier EU and US stuff, followed by Fed meeting minutes at 0400 Sydney time.

The SPI closed at 5939, up 13pts and mostly shaking off yesterday’s dump after the RBA. Unless we break through 5840/50 in the next few days it seems likely the that XJO 6000 will be next stop as yielding large cap continue to rip higher, leaving everything else in their wake. Calling a  5910 – 5970 range today.