Originally published by Rivkin Securities
US stocks closed modestly higher on Friday with the Dow Jones Industrial Average recovering later in the session to move from a small loss to a small gain. Markets shrugged off the possibility (at the time) that a government shutdown was imminent which has since occurred. If the opposing US political parties don’t come to an agreement before Monday morning, many government workers will be told not to come to work because the funding isn’t available to pay them.
US bond prices continued their upward trend and have now broken through the high point from early in 2017 to reach a new three-year high. Despite the fact that Australian interest rates are still at record lows, Australian bond yields have been following US yields higher. Although the Australian 10-year bond yield hasn’t yet surpassed the March 2017 high, it is very close. Rising government bond yields will inevitably put upward pressure on interest rates elsewhere in the economy.
The US dollar had a small rally on Friday, closing up 0.21%, although the longer-term trend is still clearly down. The Australian dollar has been climbing on the back of this weakness and is currently very close to a multi-year high, currently sitting right on US$0.80 having climbed $0.05 in the last six weeks.
S&P/ASX 200 Futures are up 30 points this morning, predicting a higher open for the index this morning.
- No Significant Data
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