Week 21 Wrap: RBA makes second cut; Bitcoin hits new high as US bonds in focus

Let’s start with the foremost obvious inclusion: the Reserve Bank of Australia (RBA) has cut interest rates for the second time. Australia’s cash rate now sits at 3.85%, now below 4% for the first time in a while.

It was hardly a shock move. The market was expecting nearly a 100% chance of a cut until jobs figures in Australia came out days before the decision, rattling some nerves, somewhat.

But had that not been the case, I wrote earlier this week Beijing’s move to cut lending rates hours before the RBA decision would have ultimately locked us in.

That’s because, like China, we now find ourselves wrapped up in a tempest of macro catalysts borne from the White House. Donald Trump, ladies and gentlemen.

Here’s an excerpt from that piece on Tuesday:

Hours before the Australian central bank moved to cut the interest rate for a second time post-COVID, China’s central bank cut benchmark lending rates also. Our largest trading partner and far more important to the AUD than what the worst of US forex volatility could muster, that we moved in-step with China is hardly surprising. 

Indeed, before Beijing made its move, traders were widely expecting the RBA to cut, to the tune of 100% certainty before a sticky unemployment rate (and 89,000 new jobs added) rattled some bulls last week. 

I am not saying, here, that the RBA made some kind of surprise last minute pivot towards a cut after seeing Beijing move on Tuesday morning. But in my view today’s move does show that Australia is unlikely to remain an interest rate laggard any longer, now that we’re being swept along in a hitherto unimagined tempest of macroeconomic catalysts stemming, ultimately, from the White House.

HotCopper

So what else happened this week?

Well, for one, while the US Moody’s downgrade to the US of last week was largely forgotten, US 10Y bond yields remain near 4.5% as investors increasingly eye US debt.

(The American Government’s debt burden seems to be on a one-month-on-one-month-off roster when it comes to whether the market gives a shit about it or not.)

For now, at least, US debt is a problem again.

And, perhaps surprisingly, against this backdrop, Bitcoin hit a new all time high this week – hitting US$111,000 per “coin.”

Here’s what else caught my eye this week:

Australian Equities

Kogan takes a hit as Mighty Ape website upgrade continues to stifle sales

Mayne Pharma plunges slaughtered as takeover partner walks away from offer

James Hardie slammed as profits drop -17%; AZEK deal hardly mentioned in meaningful way

Australian Economy 

RBA cuts rates, dogwhistling the impact of Trump’s tariffs through 2025

International Equities

Wall Street cautiously shrugs off Moody’s US downgrade

CATL’s Hong Kong listing a success in what’s thought to be 2025’s biggest IPO

International Economies 

China cuts lending rates on same day as RBA decision

Despite atmosphere becoming more comfortable, Goldman still warning on tariffs

While traders shrugged at Moody’s, US mortgage prices hit +7% 

Subaru of America hikes prices due to ‘market conditions’

Commodities

Bitcoin hits fresh all time high – are we seeing a ‘digital safe haven’ emerge? 

Regulatory, Odds & Ends

US retail investors are buying Wall Street stocks far more than insto

Trump was also responsible for an upswing across established uranium stocks on Friday, given that he’s seeking to boost the US nuclear industry in his latest pending Executive Order.