1. Australia’s unexpected rate hike — the Reserve Bank of Australia unexpectedly raised its benchmark interest rate by a quarter percentage point to 4.75%, strengthening its currency toward parity with the U.S. dollar.
2. India also raised its benchmark rates — The Reserve Bank of India raised the repurchase rate by 25 bps to 6.25%, and raised the reverse repurchase rate by a similar margin to 5.25%. It’s India’s sixth rate hike this year as the country tries to pull inflation under control.
3. Mortgage insurer Ambac may declare bankruptcy by the end of the year — the bond insurer decided to skip an interest payment on senior notes due in 2023.
4. Republicans win House, Democrats keep Senate — The Republican Party took control of the House of Representatives in Tuesday’s election, but Democrats narrowly clung to a majority in the Senate.
5. FOMC rolls out QE2 — the Fed launched a second round of quantitative easing via $600B in purchases of longer-term Treasurys by the end of June, at the rate of around $75B/month. Continued POMO reinvestments could total $250B-300B during the same period, and the Fed reserved the right to take more action if growth and inflation don’t pick up.
6. GM files for IPO — General Motors filed its long-awaited IPO, and will offer 365M shares at $26-29 each. The move will cut the Treasury’s stake in the carmaker to 43% from 61%. GM also plans to sell around $3B of preferred shares that would convert to common shares under mandatory provision.
7. New chief for Fannie, Freddie — Spencer Bachus, the Republican expected to take over chairmanship of the House Financial Services Committee, said yesterday that mortgage giants Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) should be in liquidation, not conservatorship.

The week ahead — Economic data from Econoday.com: