Markets Overview

  • ASX SPI 200 futures little changed at 7,111.00
  • Dow Average up 0.1% to 34,006.88
  • Aussie down 0.3% to 0.6424 per US$
  • U.S. 10-year yield rose 10.0bps to 4.5334%
  • Australia 3-year bond yield fell 2.9 bps to 4.00%
  • Australia 10-year bond yield fell 2.6 bps to 4.31%
  • Gold spot down 0.5% to $1,915.95
  • Brent futures little changed at $93.32/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$150 Million 0.25% 2032 Linkers

U.S. government bonds fell while stocks ended the day higher as traders speculated central banks will keep interest rates elevated to quell inflation. A gauge of dollar strength hit its highest level this year.

A bond selloff extended into a fourth week as the US Treasury 10-year yield climbed 11 basis points above 4.54%, a level last seen in 2007. Bloomberg’s Dollar Spot Index rose for a fourth day, reaching the highest since December.

The S&P 500 snapped a four-day slide, rising 0.4% as traders returned to their desks following the worst weekly selloff on Wall Street since March. The Nasdaq 100 ended the day 0.5% higher, with Inc. gaining 1.7% — the head of its cloud unit told Bloomberg Television he was seeing “huge demand” for chips used in AI. Netflix Inc. led film and TV producers higher after striking Hollywood screenwriters reached a tentative new labor agreement.

A warning that a US government shutdown would reflect poorly on America’s credit rating from Moody’s Investors Service did little to shift market sentiment Monday. Concerns about a shutdown may intensify later this week as Oct. 1 draws near.

A shutdown could effect federally-produced data releases “and in turn Fed decision-making,” according to Michael Hanson, senior global economist at JPMorgan Chase & Co. “Disruptions to data releases that persist through to the Nov. 1 rate decision would lower the likelihood of a hike at that meeting.”

Still, after the salvo of central bank decisions last week, traders are increasingly concerned that rising oil prices risk fanning inflation, which will make it difficult for policymakers to reduce rates anytime soon. Hedge funds boosted exposure to oil on bets tightening supplies will stoke demand. West Texas Intermediate oil traded below $90 a barrel in the afternoon session.

Other News

Australian Treasurer Jim Chalmers highlighted the soaring cost of disaster management in his nation ahead of a potentially disastrous wildfire season in the coming summer, fueled by El Nino.

Government funding for disaster recovery has blown out by 433% over the past three years, Chalmers said in excerpts of a speech to be delivered Tuesday in the northern city of Rockhampton. The costs stood at A$2.5 billion in the year ended June 30.

“The pressure of a changing climate and more frequent natural disasters is constant, cascading, and cumulative,” Chalmers said.

Australia has experienced several years of devastating natural disasters, from the Black Summer bushfires during the 2019-20 summer to heavy rainfall and flooding across the country’s east in 2021 and 2022.

Authorities are warning of a growing risk of severe bushfires over the coming months due to an El Nino weather system over the Pacific Ocean causing high temperatures and low rainfall.

Australia is at the forefront of climate change impact, yet has faced criticism for lagging behind in addressing the risk, particularly under the previous center-right government that ruled from 2013 through to May last year. The nation is one of the biggest per capita carbon emitters and among the largest exporters of coal.

Emergency Management Minister Murray Watt said on Sunday that Australia was better prepared for the upcoming bushfire season than it was in 2019, saying government funding for aerial fire-fighting had doubled since then.

But Chalmers will say the economic damage from climate change is only just beginning to be understood, with the Black Summer bushfires and floods in October 2022 each costing the Australian economy about A$1.5 billion.

“If further action isn’t taken, Australian crop yields could be 4% lower by 2063, costing us about A$1.8 billion in GDP in today’s dollars,” he said.