Markets Overview

  • ASX SPI 200 futures up 0.2% to 7,079.00
  • Dow Average up 0.3% to 35,390.15
  • Aussie up 0.4% to 0.6585 per US$
  • U.S. 10-year yield rose 6.2bps to 4.4665%
  • Australia 3-year bond yield rose 5 bps to 4.19%
  • Australia 10-year bond yield rose 6.4 bps to 4.55%
  • Gold spot up 0.4% to $2,000.82
  • Brent futures down 1.0% to $80.58/bbl

Economic Events

Stocks barely budged in a holiday-shortened session while Treasuries fell, with this month’s rally in global bonds showing signs of stalling.

The S&P 500 closed little changed at 1 p.m. in New York, while notching its fourth straight week of gains. Wall Street’s “fear gauge” — the VIX — dropped to 12.46, the lowest since January 2020. Ten-year US yields approached 4.5%.

Investors flocked into equities at the fastest pace in almost two years, according to Bank of America Corp.’s Michael Hartnett, as wagers of peak interest rates grow.

Global stock funds have seen inflows of about $40 billion in the two weeks through Nov. 21, Hartnett wrote in a note, citing EPFR data. Still, cash funds remain the winner with additions of nearly $1.2 trillion so far in 2023, compared with $143 billion into equities, while bond funds broadly registered outflows.

In economic news, employment declined at US service providers and manufacturers in November for the first time since mid-2020 amid tepid demand and elevated costs, a survey from S&P Global showed.

Other News

Australia’s government will introduce legislation this week to facilitate a planned revamp of the Reserve Bank of Australia, Treasurer Jim Chalmers said in a statement Thursday.

The bill follows an independent review in May which made 51 recommendations for change, some of which require modifications to the RBA’s operating law. So far, there has been general bi-partisan support for the overhaul.

Key changes highlighted by the Treasurer include:

  • Mandating that the RBA’s overarching objective is to “promote the economic prosperity and welfare of the people of Australia, both now and into the future”
  • Confirming that monetary policy should have the dual objectives of price stability and contributing to full employment
  • Repealing the power of the Treasurer to overrule the bank’s monetary policy decisions

The legislation will also contain provisions to establish a governance board to oversee the management of the RBA and clarify the RBA’s responsibility to contribute to the stability of the financial system, Chalmers said.

He added that the government hopes to finalize a new Statement on the Conduct of Monetary Policy next month. One area that is expected to cover, Reserve Bank Governor Michele Bullock said on Wednesday, is whether the RBA should focus specifically on the 2.5% mid-point of its 2-3% inflation goal.