Originally published by Rivkin Securities
US stocks opened strong but fell back during the session to eventually close flat. The S&P 500 made a new record high intraday but failed to hold it and fell back below this level. The ASX 200 rose 0.6% yesterday which brings it close to, but not quite at, a new 10-year high. The index has so far failed to reclaim the highs from 2007, just before the Global Financial Crisis hit although it should be remembered that after factoring in dividends, the index surpassed the 2007 level back in 2013.
US long term bond yields have remained relatively low in recent weeks with the 30-year yield falling below 3% earlier this month and since then has struggled to hold this level. The yield curve has continued to flatten with the spread between the 2-year and 10-year bonds now just 21 basis points. This is indicating pessimism from the bond market about the longer-term growth/inflation prospects of the US economy. The short end of the curve is driven by expectations for further rate hikes later this year. There is a high probability of a hike in September and possibly a second hike in December which would bring the number of hikes this year to four.
The first revision of US second quarter GDP will be released tonight with expectations for a slight downward revision from 4.1% to 4.0%. The current estimate from the Atlanta Fed for the current quarter’s GDP is 4.6%. The government estimate of the change in US oil inventories will also be released tonight.
Data Releases:
- US Prelim GDP 10:30pm AEST