Markets Overview

  • ASX SPI 200 futures down 0.8% to 7,069.00
  • Dow Average down 0.5% to 33,642.60
  • Aussie down 1.6% to 0.6314 per US$
  • U.S. 10-year yield rose 15.1bps to 4.7094%
  • Australia 3-year bond yield fell 3 bps to 3.91%
  • Australia 10-year bond yield fell 5.8 bps to 4.37%
  • Gold spot down 0.3% to $1,868.49
  • Brent futures up 0.6% to $86.37/bbl

Economic Events

Stocks fell and Treasury yields rose as data bolstered speculation the Federal Reserve is nowhere near declaring victory over inflation — with bets on another hike this year climbing.

The S&P 500 halted a four-day advance. Bank shares underperformed ahead of results from JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. Friday. Bonds dropped across US the curve, with the 30-year rate surging as much as 19 basis points after an auction of the securities drew weak demand. The dollar gained the most in five weeks. Swap contracts pushed the odds of another quarter-point Fed hike to about 40% — from closer to 30% Wednesday.

The so-called core consumer price index, which excludes food and energy costs, increased 0.3% last month. From a year ago, it rose 4.1%, the lowest since 2021. Economists favor the core gauge as a better indicator of underlying inflation than the overall CPI. That measure climbed 0.4%, boosted by energy costs. Forecasters had called for a 0.3% monthly advance in both the overall and core measures.

While swap contracts continue to anticipate a Fed pivot to rate cuts next year, that outcome was assigned somewhat lower odds.

Yet some analysts and traders don’t think the report was surprising enough to move the needle, especially after a raft of Fed officials speaking this week said the rout in bond markets may suspend the need to tighten further for now.

Other News

Australians look set to reject a referendum proposal to recognise Indigenous people in the constitution by creating a body to advise parliament, with polls showing a clear majority for no in almost all states before Saturday’s vote.

To be accepted, the proposal needs to achieve a majority national vote and a majority in at least four of the six states. No referendum has succeeded in Australia without bipartisan support and this one – the country’s first since 1999 – looks no different.

The body, known as the Indigenous voice to parliament, would be an independent advisory body on matters relating to Aboriginal and Torres Strait Islander people, such as health, education and housing, in the hope that such advice will lead to better outcomes. The government has pitched the voice as a way for First Nations people to be consulted on laws that affect them, and has reiterated that there would be no obligation to act on the advice.

But the political opposition has argued against the plan, claiming it would be divisive, legally risky and is lacking in detail. Discussion around it has been marred by misinformation and conspiracy theories.

And the vitriol seems to have had an effect. Over the past year, polls have shown a steady decrease in support for the voice’s creation, with most recent surveys showing support falling well short of what is needed to win when Australia heads to the ballot on 14 October. The final YouGov poll, published on Thursday, put support for the no camp at 56%, against 38% for yes.

At times, the campaign has revealed the racial divides which still exist in Australia.

Last month, the conservative Indigenous senator and leading no campaigner Jacinta Nampijinpa Price denied that Indigenous Australians continued to suffer negative effects from colonisation.

“I’ll be honest with you, I do not think so. A positive impact, absolutely. I mean, now we have running water, readily available food,” she said in widely condemned comments.

The yes campaign has also been battered by the Blak sovereignty movement, which has led the progressive no case, arguing the voice would be powerless, while pushing for truth and treaty to come before constitutional recognition.

The no campaign has leaned heavily on the slogan “If you don’t know, vote no,” which the former high court justice Robert French described as an invitation to “resentful, uninquiring passivity”.

“It does not require a black armband view of history to conclude that colonisation did not bring unalloyed benefits to our First Peoples,” French said. “Nor does it require rocket-science logic to conclude that we live today with the cross-generational effects of that collision.”

The yes campaign, meanwhile, has pointed to the past as showing why voters should vote yes. The Australian prime minister, Anthony Albanese, spent part of the final campaigning week in the nation’s centre, Uluru, where the proposal for the voice was first formally presented in 2017.

Sitting with senior traditional owners in central Australia, Albanese said Australians had an opportunity to “lift the burden of history” and move forward with a positive vote on Saturday.

“I believe Australia can rise to the occasion between now and 14 October,” he said.

“We have just … days now in which Australia can be an enlarged country, a country at peace with our history, a country more unified, a country able to move forward, in the words of the Uluru statement itself, walking together for that better future.”

The referendum was one of the first commitments Albanese had made upon winning the election in 2022.

The bruising campaign concludes on Saturday, when voting booths close and the count begins. Attention is slowly turning to the aftermath of the referendum result, and what a no vote would mean for the nation.

The Labor senator Pat Dodson, known as “the father of reconciliation”, gave a speech on its impact in the last days of the campaign.

“If we say no, then obviously that’s going to be [a] matter for us to reflect upon,” he said. “We need to look in the mirror and say who the hell are we, what have we done, and what are we going to do about it?”

The leading yes campaigner and Indigenous activist Noel Pearson said a no vote would “bring shame upon us”, while the prominent Indigenous leader Marcia Langton said it would have long-lasting consequences for Indigenous people. Both have said they would withdraw from public activist work in the event of the referendum failing.

Langton said: “I fear a no vote will be interpreted – and falsely, I should say – as a mandate for governments to do nothing and to make our lives worse.

“Many Indigenous Australians who are on the frontlines of dealing with these problems in towns and cities and communities and outstations and home lands are very worried about the prospect of losing the voice because they already have little say, and a loss will mean that they have even less.”

(The Guardian)