While most economists still expect the Reserve Bank of Australia to hold fire for an extended period, calls for another rate cut have been gaining traction, after economic growth slowed significantly in the third quarter of this year. Key for RBA governor Glenn Stevens and his board will be the jobs market: will the unemployment rate rise further, or will the transition away from mining-led growth strengthen and finally translate into more jobs? We've asked a number of Australia's top investors, economists and analysts which financial markets indicator they will be watching particularly closely, and to add a short explanation why they think it's relevant. This is what they sent us:

SEBASTIAN EVANS, managing director/fund manager, NAOS Asset Management:

An indicator that I will be watching very closely next year will be private sector wage growth in the US. A sharp increase in this above 2.5% will force the Federal Reserve to start increasing interest rates, which will have ramifications for equity markets domestically and globally. DONALD WILLIAMS, CIO, Platypus Asset Management: As the chart below shows, the yield curve has flattened and is now inverted in the near-term, indicating that the current RBA setting is becoming more and more restrictive, thereby contributing to the current economic malaise. Keeping a close eye on the shape of the yield curve will tell you how many times the RBA will cut rates next year, which will be a precursor to better earnings and a key driver of the stock market.

TAMAR HAMLYN, principal, Ardea Investment Management: The term premium measures the additional compensation, or yield, received on holding long-dated bonds, for example a 10-year bond, relative to what would be earned from holding cash over the same time period. In recent years, the term premium has been pushed close to zero, because of strong appetite to hold bonds from private investors, ongoing government buying as part of quantitative easing programs, and a commitment by global central banks to keep rates low. There is the risk next year that an improving global outlook could lead to a sharp reversal higher in the term premium. A higher term premium will be good for investors in the long-term, because it provides a greater rate of return for investing in bonds. In the short term, however, it highlights the importance of delivering robust and innovative strategies within fixed income in the current, rather unusual set of market circumstances, to ensure that returns continue to offer good compensation to investors. ANDREW QUIN, research and strategy co-ordinator, Patersons Securities Limited:

We will continue to watch credit default swaps (CDS) closely next year, and bond yields as indicators of credit risk in the global markets. We keep a close watch particularly on US, EU, Russian and Japanese sovereign CDS and bond yields. MICHAEL BLYTHE, chief economist, Commonwealth Bank of Australia: I will be watching measures of job security very closely. I think elevated fears explain much of the weakness in consumer sentiment and wages growth, the desire to save and the reluctance to borrow (outside of housing). So it is the key to the consumer story and an essential part on the growth transition. The data is from Melbourne Institute/WBC and is published on a monthly basis.

ANNETTE BEACHER, head of Asia-Pacific research, TD Securities: I'll be watching the TD inflation gauge next year. The split between tradeable and non-tradeable CPI will be key over 2015, because it will help shape expectations as to whether the RBA needs to cut or whether the next move is up for the cash rate. Will oil dampen inflation or will the lower AUD force tradeable inflation above the target band? At least with our monthly inflation gauge we'll not have to wait for the quarterly CPI prints to find out the landscape of inflation next year. STEVE MILLER, head of fixed income Australia, BlackRock: We have become used to thinking that high credit quality sovereign bonds are a safe hedge against adverse movements in riskier equity exposures. That has been our experience for most of the current millennium. As the chart shows, this has not always been the case. Indeed, for most of the past century bond and equity returns were positively correlated. It is not out of the bounds of conceivability, therefore, that our recent experience is anomalous, particularly given how expensive current high credit quality sovereign bond valuation looks and that equity valuations are by no means cheap. At the very least, bonds will no longer offer a free lunch of both a solid return and hedge against stock downturns

STEPHANE ANDRE, portfolio manager, Alphinity Investment Management: For commodities, if I had to pick one indicator it would be Chinese property sales. In simple terms, China accounts for about half of global bulk and base metals commodity demand, and its construction/property sector is the main driver of commodity consumption. Property sales growth is therefore a leading indicator of construction activity and associated commodity demand, ie, not only steel and its raw materials (iron ore, metallurgical coal) but also copper and aluminium, commodities Australia is very exposed to. Property sales are also a good indication of confidence in the economy. So while I believe that supply growth is the main issue that is putting pressure on prices, the demand surprise is the more volatile and less visible portion of the equation to have a good call on, hence the usefulness of this indicator.

DAVID MCDONALD, CFA, APAC, CIO Office Australia:

We are following closely the AUD and commodity prices. We expect commodity price weakness to continue and see the AUD as still at risk of downside going into next year. We believe this means that investments in offshore equities are likely to gain from this weakness, as well as gaining support from the global recovery and central bank action. We recommend investors diversify into global equities rather than just holding local equities. TIM CARLETON, principal and portfolio manager, Auscap Asset Management: One of the key indicators for consumer discretionary spend is confidence. We look at the Westpac Consumer Confidence Index to gauge broader market sentiment, because it typically leads trends in consumer spending. This is particularly significant around important trading periods such as pre- and post-Christmas.

SAUL ESLAKE, chief economist, Bank of America Merrill Lynch: In terms of trying to get the RBA call "right" - will it or won't it cut rates in the first half of next year - I will be looking most closely at the unemployment rate (if that keeps trending up it will be more likely to cut), the NAB survey measures of business confidence and business conditions (if they keep heading down the RBA will be more likely to cut), and the AUD (if that keeps heading down the RBA will be less likely to cut). BEN MCCAW, portfolio manager, MLC Diversified Funds: The chart that we're providing for next year is a measure of investor unease (or anxiety) that we put together based on the VIX and SKEW indices. Specifically, we use VIX and SKEW to estimate and chart the implied probability of a 10% correction in the S&P 500 over the next 30 days. This measure of investor anxiety is contrarian, tending to low levels in frothy markets before a correction, and elevating at or near the nadir of a risk-off period. This is something that we keep a close eye on and it aligns well with our tendency to stray from the crowds - we tend to worry when others are complacent and take on opportunity when others are worried. We have been worried about high valuations for a while now, and this chart re-enforces our concerns for 2015.

GEOFF WILSON, chairman, WAM Capital Limited: The indices we look at are the taxi driver revenue index and the shop assistant index. We collect them and they are random samples, either in a tax or in a shop, but that gives us a good feel of how the economy is performing. To get the best publicly available index we look to the Westpac Melbourne Institute Consumer Confidence Index, because 71.8 per cent of Australian GDP is consumption, and to understand what is happening with commodities and demand for commodities we look at China PMI. MASON WILLOUGHBY-THOMAS, CFA portfolio manager, Australian Ethical Investment:

Equity markets have had strong support from the US bond-buying program by suppressing bond yields and encouraging investors to seek yield in higher-risk asset classes such as equities. Equity investors nervous that the start of rate tightening will reverse this effect, despite the positive connotations for the performance of the underlying real economy and corporate earnings. Inflation and inflation expectations will be a key driver of the Fed's decision to increase interest rates as it seeks to head off the potential for runaway inflation following years of heavy liquidity support. Fears persist that much of the global economy is not ready for higher borrowing rates in the world's reserve currency. There are potentially serious implications for emerging and commodity-driven economies that are heavily dependent on dollar financing of their current account deficits. Currency crises, debt defaults and political upheaval all threaten in this environment. MATTHEW SHERWOOD, head of investment market research, asset management, Perpetual: Chart 1 examines current bond yields and future rates of returns in the Australian bond space. It is important because it reminds investors about the importance of valuation, because the lower the yield goes, the lower the future rate of return goes. Australian 10-year yields are currently trading at 2.85%, which suggests that if you invested in the market today, that your return over the next 10 years is likely to be about 2.85%. The ultimate determinant of investment return from any asset allocation made is your starting valuation and this is at a historic low for government bonds and tells us that returns over the next 10 years are likely to be about the rate of inflation. Accordingly, investors will need exposure to risk assets if they are to build their wealth in real terms.

The second chart is a cyclically adjusted PE ratio for the US sharemarket. This follows the work of Robert Schiller and before him Benjamin Graham, who measure current prices against an inflation adjusted 10-year average earnings per share. My model follows the same concept as Schiller but makes allowance for the cost of capital (namely bond yields), demographic changes and the average US earnings cycle, which is less than Schiller's assumed 10 years. The model tells us that long-run US returns are set to decline in the next few years and therefore better opportunities will likely exist in markets with cheaper valuations. PATRICK NOBLE, senior investment strategist, Zurich Investments:

The oil price is of real interest now across many areas. Figures 3 & 2 are interesting in regards to the "fiscal cost curve" for OPEC members. The accompanying policy insights are prescient when speaking of "doubts of the ability of OPEC to act as a group of peers" and Saudi Arabia's recent policy decisions.



Still, based on a higher fiscal break-even than current prices for the Saudis, it will be interesting to see how long the shakeout takes before the oil price stabilises (and at what price).

RAIKO SHAREEF, currency strategist, Bank of New Zealand: One of the great consensus trade ideas of next year is undoubtedly to be long on the USD. This comes thanks a US economy that is gaining momentum while other major economies slow, and a central bank that looks set to raise interest rates while others are still aggressively easing, or contemplating such moves. This has the USD poised to rise to its strongest level in nearly a decade, exceeding even the safe-haven demand it had in the midst of the GFC. But consensus trades have a history of going badly awry. This time last year, the consensus thought that US bond yields were heading higher. Instead, 10-year yields have fallen by about 30%. Falling inflation will not be the torpedo that sinks this ship – that is a global phenomenon, and should not change the US economy's relative outperformance. Instead, we look for US-specific risks. We watch two in particular: (1) An unusually harsh winter clogged US economic activity in early 2014, and November's Arctic blast has us wondering whether we might be in for a repeat. (2) The US debt ceiling is due to be debated again in 2015, and battle lines are being hardened by President Obama's recent executive orders. Political brinkmanship might once again lead to a government shutdown.

GRAHAM HARMAN, Investment Strategist Asia-Pacific, Russell Investments: One of the key watch-points for investors in 2015 will be the strength and extent of economic recovery, not just in the United States, where positive signs are already quite visible, but in the rest of the world. A useful chart to keep tabs on in that context is the Baltic Dry Index. The index is a measure of the freight cost of moving major raw materials by sea. It gives insight into the pace with which world trade is picking up, and also the pace at which excess capacity – in shipping and commodity markets – is being soaked up by firmer trading conditions. The index has had a few false starts towards recovery so far in this post-GFC cycle, and is languishing at multi-decade lows, well below 1000. We would be looking for a sustained move above 2000 over the course of 2015, as evidence that recovery in global trade, and the global economy, does indeed have a convincing pulse.

RAAZ BHUYAN, principal, WaveStone Capital: The US 10-year is important because it's an indication of how much return investors need to tie up their money for 10 years and is used as a valuation benchmark globally. Since the GFC, the 10-year yield has fallen from almost 5% in 2007 to just over 2% today. This has acted as a tailwind for equity valuations for all long duration stocks - in simple terms, we have seen a huge PE rerating coming out of the GFC lows, even as earnings have struggled to keep pace. We believe in 2015 we will see a change in rhetoric from the US Federal Reserve as the US economy is finally showing signs of a sustainable recovery,with the unemployment rate falling from a peak of 10% in 2009 to 5.8% last month. Interestingly, most equity investors are very bullish on US growth but seem less concerned about US rate increases. Hence our view that any normalisation of the rate environment will have a bearing on the equity markets in that performance of the markets will be more driven by changes to companies' earnings (and returns) rather than a PE re-rating – generally a good environment for bottom-up investors such as WaveStone.