Markets Overview

  • ASX SPI 200 futures down 0.2% to 6,988.00
  • Dow Average little changed at 34,074.77
  • Aussie down 0.3% to 0.6491 per US$
  • U.S. 10-year yield rose 9.2bps to 4.6639%
  • Australia 3-year bond yield fell 1 bp to 4.27%
  • Australia 10-year bond yield little changed at 4.72%
  • Gold spot down 0.6% to $1,980.30
  • Brent futures up 0.6% to $85.43/bbl

Economic Events

  • 14:30: (AU) Nov. RBA Cash Rate Target, est. 4.35%, prior 4.10%
  • 16:30: (AU) Oct. Foreign Reserves, prior A$90.4b

Stocks struggled to gain much traction as bond yields rose, with traders betting the Federal Reserve will lean against the recent easing in financial conditions by saying it will keep its options open on policy.

After notching its best week of 2023 amid dovish Fed bets, oversold technical levels and positioning, the S&P 500 edged slightly higher on Monday. A reversal of the moves in bonds also weighed on sentiment, with 10-year yields up eight basis points to 4.65%. Treasuries slid amid a heavy slate of corporate debt sales and ahead of a series of auctions beginning Tuesday.

Wall Street waded through the Senior Loan Officer Opinion Survey — known as SLOOS — which showed tighter standards and weaker demand persist at US banks. A raft of Fed officials — including Chair Jerome Powell — is due to speak over the next few days. Swaps are pricing in more than 100 basis points of rate cuts by the end of 2024 from an expected peak rate of 5.37%.


Other News

Prime Minister Anthony Albanese has met with President Xi Jinping in China, becoming the first Australian leader to do so in more than seven years and sealing a recovery in diplomatic relations between the nations.

The official Xinhua News Agency reported their meeting in Beijing on Monday. Albanese arrived in the Chinese capital Sunday after starting his historic visit in Shanghai, where he attended the China International Import Expo and delivered a speech in which he praised the “mature relationship” between the two countries.

“Australia, along with other countries in the region, has an interest in continued stable growth in the Chinese economy, and its ongoing engagement with the world,” Albanese told Xi, according to a readout from Australia. “A strong relationship between our two countries will be beneficial into the future. Where differences arise, it’s important that we have communication. From communication comes understanding.”

Xi told the Australian prime minister that “with joint efforts of both sides, we’ve been resuming our exchanges in various views and worked out some problems.”

“Now, the China-Australia relationship has embarked on the right path of improvement and development — I’m heartened to see that,” Xi said.

A day earlier in Shanghai, Albanese pledged to keep working with China. “It is in all of our interests to have a relationship where there is dialog,” he told an audience which included Chinese Premier Li Qiang.

The import expo has special significance for Albanese, as Australia is still waiting for trade restrictions to be lifted on a number of agricultural products, including wine, beef and rock lobsters. Beijing imposed punitive trade actions at a low point in relations in 2020, after then-Prime Minister Scott Morrison called for an investigation into the origins of Covid-19, infuriating the Communist Party leadership.

Relations between Australia and China have improved since the election of Albanese’s center-left Labor government in May 2022. High-level ministerial meetings restarted and restrictions on imports of Australian coal, timber and barley have been lifted.