Originally published by Rivkin Securities
Stocks continued their steady upward trend overnight with many of the major markets up, including the Dow Jones (+0.32%), S&P 500 (+0.22%), FTSE 100 (+0.65%) and DAX (+0.82%). Fears of the impacts of trade wars are fading for now and equity markets have now had several days of gains. The ASX 200 had a strong day yesterday following declines earlier in the week and futures are pointing to a higher open this morning (up 9 points).
Long term US bond yields are remaining low despite a number of factors that should be pushing them higher. First, the unwinding of the Federal Reserve’s balance sheet is accelerating and should reach a pace of $50bn per month by the end of the year. The Fed turning from a buyer to a seller should put downward pressure on prices (upward pressure on yields) and record Treasury issuance by the government will compound the effect.
Today Australian employment data will be released which is expected to show a gain in employment of 16,700 new jobs while the unemployment rate is expected to remain steady at 5.4%. Australia’s employment situation remains in a state that is neither particularly strong nor weak. Job growth has been steady and the unemployment rate is close to the natural sustainable unemployment rate. Wages growth has been a thorn in the side of the Reserve Bank (RBA), however, as inflation is being kept down due to low wages growth. This is one of the major reasons the RBA is reluctant to begin hiking rates.
Data Releases:
- Australia Employment Data 11:30am AEST