“The Dow surged 2.06 per cent”, reports the AFR, “reversing course after a 115-point drop on Wednesday, and a 374-point decline last week. It was the Dow’s largest one-day gain since April 2, 2003, when the blue chips closed 215.20 points higher.

“As stocks rose, Treasury prices declined, with the yield on the 10-year note rising to 4.3%, up from 4.19% late on Wednesday. The US dollar was mixed against other major currencies; gold was also mixed. Crude oil settled up US17¢ at $US54.20 on the New York Mercantile Exchange.”

But “the market is still jittery,” said a trader. Yesterday’s price action came after the opposite moves on Wednesday night, the fall in bond yields causing even experienced market traders to chew the carpet in frustration. Alan Greenspan has been telling the pollies in America that their budget is creating increasing economic risk. “Large deficits cause ever rising interest rates … unless reversed, the deficit will cause the economy to stagnate … or worse.”

And the Reserve Bank may be warning us all (with great subtlety, using a graph!) not to stuff up the resources boom.

Read more here .

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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