Australian headline inflation has
risen above 3%, outside the RBA’s target range, and with core inflation
at 2.9%, all eyes will be on the RBA Board meeting this week.

Also,
US equity and bond markets were quiet on Friday. New jobs data was a
tad under expectations, but the measured rate of unemployment fell to
4.9%. Of course these statistics ignored all the unemployed people in
what’s left of New Orleans, and discussion of the likely impact here
dominated the media. We have covered this tragedy in Henry’s Blog, the
latest edition of which here.

The
price of oil at US$70 per barrel has stopped the rise of equity prices
globally, and there has also been another cut in most bond yields.
Announcements of releases from strategic oil stockpiles helped bring
the spot price down a bit, but most future prices are hovering at
almost US$70.

A lot hinges on how the oil market behaves. Bird Flu
is also a worry, although some commentators strongly disagree with
this. Whether the loss of confidence in America’s political leadership
rattles markets further is the wild card at present. Henry is treading
carefully but covers all the economic issues here.