Originally published by Rivkin Securities
US stocks rallied overnight with the Dow Jones climbing 0.71%, slightly outperforming the broader S&P 500 which closed 0.54% higher. The ASX 200 closed down 0.38% yesterday although futures this morning are 29 points higher. The minutes of the most recent monetary policy meeting of the Reserve Bank of Australia were released which showed that the bank still expects that the next interest rate move is more likely to be up than down. Furthermore, it is not particularly concerned about the rise in bank funding costs as it says these are still low relative to history.
US 10-year bond yields surged above 3% overnight to their highest yield in four months. The current yield is 3.06% and a break above 3.11% would be the highest level since 2011. With another US rate hike almost certain for next week, one would expect the upward pressure on bond yields to remain. Conversely, the higher rates on US bond yields and expectations of further rate hikes are putting a lid on gold prices which have been consolidating around US$1,200 per ounce for around a month now.
Today the Bank of Japan decides interest rates although no change from -0.1% is expected. Later tonight, UK CPI data will be released.
Data Releases:
- Japan Interest Rate Decision (Time uncertain)
- UK CPI 6:30pm AEST