The hopes expressed in last week's Hedge Clippings - namely that the Hayne Royal Commission's final report due next February won't focus on increasing regulations, but will rather insist on accountability for poor - and possibly criminal behaviour - seem to have been given a good chance of coming to pass if the interim report is anything to go by.

Whilst we have to admit to only skimming some sections of the 1,000 page, three-volume interim report released last Friday, we have read enough to continue to be significantly impressed by its overall direction, and to see no reason we won't be equally impressed by the final version. Commissioner Hayne clearly recognises what the underlying problems are - namely conflict of interest, greed and regulators who need to act to prosecute - and prosecute hard from the top down - rather than to add ever increasing regulations on the industry.

If anything, removing existing carve-outs such as grandfathered commissions would be more useful than adding more laws.

Apart from the Commission's ability to put wrongdoers firmly in the spotlight, what the HRC has exposed is the previous difficulty encountered by customers when bringing their grievances to the attention of the regulators. We would expect the final report to also include recommendations regarding beefing up the FOS, or simplifying and speeding up the processes around it.

In spite of calls by the Federal Opposition to extend the HRC and the work of Commissioner Hayne AC QC, and his team, it sounds as if he'd rather finish it up as scheduled next February, and let the Government (hopefully) get on with the task of implementation of the recommendations.  Simply extending, and presumably finding more of the same, won't add to what's been uncovered already.

Elsewhere this week the US 10 Year bond rate reached multi-year highs as the Fed tightened again, with expectations of a further one or two moves over the balance of this year. The US economy is surging, and with unemployment sub 4% the question is when will inflation kick in, and at what level will 10-year bonds spoil the equity party? Anecdotally most fund managers we hear from believe a correction is overdue, but none are quite prepared to say when.