Originally published by Rivkin Securities
US stock markets initially opened lower but a midday ramp put both major indices into positive territory. The Dow Jones Industrial Average closed 0.2% higher while the S&P 500 was up 0.3%. So far this week, a degree of normalcy has returned to markets after the volatility of last week. New Federal Reserve chairman Jerome Powell commented last night that the Fed will continue on its path of gradual interest rate hikes but it will also be cognizant of risks to financial stability. Current market pricing suggests a 77.5% chance of a rate hike in March.
US longer-term bond yields have stabilised for the time being with the 10-year yield currently at 2.83%. The recently announced US budget, if passed as is, would significantly increase the government’s borrowing requirements and therefore continue to put upward pressure on rates.
The Australian dollar has rallied slightly over the last few days against the US dollar however it is still weak relative to levels from late January. The US Dollar Index also fell back below the 90 level last night, resuming the slide that has persisted for the last several months.
Data Releases:
- US CPI 12:30am AEDT
- US Retail Sales 12:30am AEDT