Bonding oil prices to yields

Daily update

Bond yields and oil prices continue their close relationship. Central banks are supposed to look through an oil price shock as being beyond their control. However, if central banks seemingly care about oil, the only policy remedy is to weaken the non-oil economy, as something they can control. In that case, higher oil prices make it more likely interest rates will have to rise to recession-inducing levels. We are not at that stage, but there are enough oil price comments to have markets contemplating more repressive monetary policies.
The Reserve Bank of Australia raised interest rates, as expected. Unlike other central banks, the RBA began the year with an accommodative policy position and a desire to move toward neutral. The Gulf war created a pause, but that policy objective seems back on track.
The US labor market is a focus, and good quality data on job openings and turnover would be helpful. Unfortunately, good quality is not available, and instead we will get the August JOLTS data (derived from a survey with an appallingly low response rate).
The UK British Retail Consortium shop price index showed a slight slowing of inflation across the board in September. Preliminary Spanish consumer price inflation is expected to show a higher headline rate.