“US inflation up, but core inflation subdued” is the overnight news. With good earnings results also, share prices surged and are flirting with new records.

The US Labor Department’s core consumer price index rose by just 0.1% in March, which allowed investors to start talking rate cuts again. The bond market continued its recent rally, with the yield on the benchmark 10-year bond falling by 5 basis points, following a 4 basis point fall yesterday. Investors gained more good news with a US Commerce Department report finding that March housing starts rose by a higher-than-expected 0.8%.

In other economic news, the weekly ABC News/Washington Post Consumer Comfort Index found consumer sentiment remaining at relatively depressed levels as Americans are feeling the pinch at the “gas” pump. The measure stands at -5 this week on its scale of +100 to -100, as gas is up 71 cents over the last 11 weeks.

In Australia, Labor leader Kevin Rudd “threw a bone to business” (John Howard) on industrial relations or reached a “suitable compromise” (ACTU source). The more leftish unions are grumbling, but this is no doubt part of the theatre of what is proving to be a highly effective, “this time its time” campaign by Labor.

Kevin Rudd tells his story in the Oz:

The core question for Australia’s long-term economic prosperity is how we rebuild our flagging productivity growth. This is the only way we can continue to improve living standards once the mining boom passes.

On industrial relations, John Howard has turned the clock backwards rather than forwards, has gone for the cost-gouge rather than the productivity lift, and in doing so has thrown the fair go out the back door. By contrast, we will create a new balance between fairness and flexibility in the workplace and restore the rights of working families to have proper access to penalty rates, overtime and shift allowances, and also to allow them to properly plan ahead to spend time with their families on weekends.

Note the reference to the “fair go”. Henry has advised the gummint to introduce a “fair go tribunal”, but so far, the old boy’s not for turning. The battle is hotting up; even some quite influential Libs are feeling gloomy.

Henry accepts that Labor’s plan is not a total rollback. There will be a new drag on employment, compared to the current situation, and new safeguards for the bruvvers, but at least Rudd’s Labor is well aware of economic reality.

Read more at Henry Thornton.