Originally published by Rivkin Securities
Although it was a relatively flat session for US stock markets there were nevertheless some interesting movements in financial markets. US bond yields rose with the 10-year yield now very close to the psychological 3.0% level. The 10-year has now moved from 2.73% in early April to 2.98% now, which is a four-year high. US yields are now well above Australian bond yields with the Australian 10-year yield nine basis points lower than the equivalent US yield at 2.89%.
The US Dollar Index rose for the fifth session in a row overnight which put some pressure on precious metals and commodities. Gold fell US$12 per ounce back towards one-month lows. Silver was also hit hard, falling almost 3%. Despite the stronger dollar, oil prices moved back to recent highs coming very close to US$69 per barrel. Oil strength is coming from Saudi Arabia’s recent commitment to get oil back up to between US$70 - $$80 per barrel as well as inventory levels that are back in the normal range.
Today, Australia’s CPI data for the first quarter will be released. Expectations are for an 0.5% rise which would produce an approximate 2% annual rate if maintained. Relatively low inflation is giving the Reserve Bank running room with regards to leaving the official cash rate at such low levels. An increase in inflation would likely spur the Reserve Bank to hike the cash rate sooner rather than later.
Data Releases:
- Australia CPI 11:30am AEST