Markets Overview

  • ASX SPI 200 futures down 0.3% to 7,225.00
  • Dow Average little changed at 33,573.70
  • Aussie up 0.7% to 0.6733 per US$
  • U.S. 10-year yield fell 13.2bps to 3.4006%
  • Australia 3-year bond yield fell 1.6 bps to 3.07%
  • Australia 10-year bond yield fell 4 bps to 3.36%
  • Gold spot up 1.1% to $1,790.51
  • Brent futures down 2.3% to $77.50/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1 Billion 105-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 154-Day Bills
  • 11:30: (AU) Oct. International Trade Balance, est. A$12b, prior A$12.4b
  • 11:30: (AU) Oct. Exports MoM, est. 1%, prior 7%
  • 11:30: (AU) Oct. Imports MoM, est. 2%, prior 0%

The stock market came under pressure once again, with Treasuries signaling growing concern about a recession next year amid an aggressively tight Federal Reserve policy.

In a session marked by unnerving swings in both directions, the S&P 500 suffered a fifth straight loss. Oil erased its 2022 gains on easing demand for fuels. Economic jitters were palpable among bond traders, with a key segment of the US curve reaching a four-decade extreme. Treasury 30-year yields sank to the lowest since September.

To Nicholas Colas at DataTrek Research, the spread between two and 10-year rates is extremely wide — and is “clearly spooking” equity traders. That’s a signal that markets believe the Fed policy is “very, very restrictive,” he noted. Curve inversions have a track record of preceding economic downturns by 12 to 18 months.

“The last time we were here was at the start of the ‘Volcker recession,’” and his Fed was already cutting rates,” Colas said. “Now we have a Fed that is still talking about ‘higher for longer’ rates. Markets are essentially saying there will be another man-made economic contraction soon: the ‘Powell recession’.”

Ark Investment Management’s Cathie Wood said the bond market appears to show that the Fed is making a “serious mistake” with its monetary policy. Deflation is a much bigger risk than inflation, she noted in a series of Tweets.

Bond-market gauges of inflation expectations have declined in recent weeks. The 10-year breakeven rate for Treasury inflation-protected securities is hovering around 2.3%, down from 2.6% in late October.

A measure of labor cost growth reinforced the narrative that’s been benefiting Treasuries for the past month — that inflation has peaked. Meantime, mortgage rates fell for a fourth week in a row, the longest such stretch of declines since May 2019, as the Fed has signaled it will soon slow down the pace of tightening.

Other News

Dramatic footage has captured the moment a loggerhead turtle bested a tiger shark off the coast of a beach in Western Australia.

Drone operator Jack Garnett told Storyful that he captured the epic footage on the last day of a family vacation to the Winderabandi coast. His three teenagers had seen the loggerhead several times before, and affectionately nicknamed it “Mr. Turtle.”

“On our last day at Winderabandi, the girls saw some unusual water splashes 50 meters off the shoreline and the drone was sent out to investigate,” he told the outlet.

“I initially told the kids to not watch the drone video link as it appeared that a large three-meter tiger shark was in the process of eating poor Mr Turtle.”

The turtle, however, used its shell to roll over the aggressive shark several times, evading multiple bites.

“Over the next 10 or so minutes, our family was truly amazed as we huddled around the screen enraptured by a great battle between Mr Turtle and the tiger shark,” Garnett said.

Eventually, Mr. Turtle nibbled on the tiger shark’s tail, causing it to swim away in defeat.

“A single mistake by Mr Turtle would have meant a lost limb or fatal bite,” Garnett marveled. “[It was] an amazing outcome to see him swimming smoothly and at max power along the shore at the end.”

Garnett has since shown the video to marine biologists who recognized the turtle’s ingenuity as “known behavior” for the species. They also identified the lucky tortoise as a female based on the shape of its tail, noting that its trademark speed and mobility were assets in the fight.

Loggerhead turtles are classified as endangered in Western Australia per the 1950 Wildlife Conservation Act. Recognized by their reddish brown coloring, they often weigh over 200 pounds.

“They had never seen footage that captured [a fight] it so clearly and usually the turtles don’t win,” Garnett boasted. “They said that turtles are colloquially called tiger shark ‘sea-biscuits’ as they are a favored meal of the apex predators.”

While Garnett and his family are now back home, they will always remember their encounter with the special turtle– with one particular amendment. “My kids have also renamed the turtle Mrs. Turtle,” Garnett said.