A spiky, volatile week last week and we can expect more of the same in the week ahead, but activity might settle down as it becomes clear there's little upward pressure on US prices and thereforeinterest rates.
Last week's US consumer and producer price indexes both confirmed that headline inflation was running at higher levels because of higher petrol and oil prices.
But once you stripped those out, the story was one of relatively stable prices.
Core prices rose 0.1 per cent in May and 2.2 per cent over May 2006. That was the smallest 12-month gain since March last year and a sign that inflation is moderating.
The headline rates was up 0.7 per cent on April and 2.7 per cent over May last year but even that, while a little high, didn't worry the markets.
Certainly the huge US Government bond market picked the trend, with yields on the key 10 Treasury year bond easing to 5.15 per cent on Friday, compared to the peak of 5.32 per cent last Tuesday.
That was a significant retreat on Friday and it would have to take something pretty big to push rates back to those midweek highs of last week.
And there's nothing on the horizon capable of doing that.
The turnaround in sentiment in the US has been matched here after the bears and hawks were roundly routed in the wake of the speech on Thursday by Reserve Bank Governor, Glenn Stevens. He saw no need for a rate rise but pointed out that if there was a need, the bank would move election or no election.
That prompted a retort from an obviously nervy Prime Minister who told the Governor there was no need for a rate rise.
Mr Howard deliberately ignored the point that the BRA doesn't concern itself (and doesn't have to worry) about what Prime Ministers may or may not think (and Treasurers, Premiers and Opposition Leaders for that matter).
The AMP's Dr Shane Oliver said in his weekly comment Friday that while it was too early to say whether the recent bond market driven correction in shares was over (and we may still see a bit more weakness or volatility in global and Australian share markets in the days and weeks),"the bull market in shares is alive and well and this is likely to remain the case for some time to come".
He said share market valuations are not onerous: the "goldilocks" economic backdrop of solid growth and benign inflation looks set to remain intact and the profit outlook is solid.
"While interest rates may still move higher, they are far from threatening levels and the flow of funds into global and Australian shares is likely to remain very strong.
"Anecdotal evidence suggests that inflows into super funds are now surging ahead of the June 30 cut-off for contributions of up to $1 million and this will provide a strong source of support for Australian shares.
"Bond yields may yet have a bit more upside in the short-term as bond investors continue to switch from long duration positions to neutral or short positions.
"However, with the US economy likely to be constrained by the housing slump for the rest of this year and US inflation likely to head lower, it is unlikely that bond yields will rise too much further.
"Bond yields in the US, Australia and Europe are already around or above long-term sustainable levels.
"The $A has more upside ahead of it, probably to the February 1989 high of $US0.8950, given the normal tendency of currencies to go to extremes, the continued strength of Australian economic data, the prospect of another interest rate hike sooner or later and strong commodity prices."
We saw that on Friday where US investors drove the Aussie dollar back over 84 USc to end around 84.20, roughly unchanged on the week.
For the week, the Dow gained 1.6 per cent, the Standard & Poor's 500 rose 1.7 per cent, and the NASDAQ climbed 2.1 per cent.
For the year so far, the Dow is up 9.44 per cent, the S&P 500 is up 8.08 per cent and the NASDAQ is up 8.75 per cent.
In Australia the All Ords closed at 6317.1, up one per cent over the week. The ASX 200 ended at 6293.8, up by a similar amount.
Ten year Australian Government bonds ended at 6.29 per cent, above the cash rate of 6.25 per cent, which, after last week's comments by the RBA Gov, won't be changing for a while.