In yesterday’s screencast we discussed the method by which the Federal Reserve can affect relative asset prices.  Today we take a look a country is the flip side of what is happening here in the US.  In Australia the central bank is in the midst of a concerted effort to raise interest rates.  Last night the Reserve Bank of Australia raised short term interest rates another 25 bp to 4.75%.  Robust commodity markets and a booming housing market have been examples of strength in the Australian economy.  Clearly the central bank can’t much affect the global commodities market, but it can raise the cost of housing finance.  The case of Australia and the persistent strength in its currency highlights the benefits to investors to taking a global view.  Even when the local economy is in a state of disrepair, like the US, there is always the potential to find a bull market elsewhere.  Eventually the Australian economy will slow, but for now investors are willing to overlook the RBA’s intentions.  In today’s screencast the case of Australia where their central bank is attempting to put on the monetary brakes.

Items mentioned in the above screencast:

Australia and India raise rates to cool inflation.  (Bloomberg)

Australia is one of the “clear standout economies.”  (WSJ)

A number Asian countries are raising interest rates.  (FT Alphaville)

The Australian dollar hits parity with the US dollar.  (Street Sweep)

Inflationary pressures are brewing.  (Money Game)

Higher interest rates are beginning to affect the Australian housing market.  (Data Diary)

Weekly charts of the CurrencyShares Australian Dollar ETF (FXA) and the iShares MSCI Australian Index ETF (EWA).  (Finviz, ibid)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.