Markets Overview

  • ASX SPI 200 futures little changed at 7,588.00
  • Dow Average little changed at 38,700.37
  • Aussie down 0.5% to 0.6489 per US$
  • U.S. 10-year yield rose 4.7bps to 4.1676%
  • Australia 3-year bond yield rose 1.6 bps to 3.67%
  • Australia 10-year bond yield rose 1.9 bps to 4.11%
  • Gold spot down 0.1% to $2,032.77
  • Brent futures up 3.4% to $81.88/bbl

Economic Events

  • 09:30: (AU) RBA Governor Bullock – Testimony

Treasuries struggled to gain traction despite a strong $25 billion sale of long-term bonds that capped a week of ramped-up issuance sizes. Stocks hovered near records.

US yields rose even after the 30-year auction reduced concerns about an oversupply. As it’s typical for insurance companies and pension funds to be the main players this far out on the curve, this auction is less helpful in gleaning market messaging, according to Peter Boockvar, author of the Boock Report.

investors are also positioning for Friday’s consumer-price index revisions because of what happened a year ago: the update was significant enough to cast doubt on overall inflation progress.

In economic news, US initial jobless claims fell for the first time in three weeks, adding to evidence of a still strong labor market and giving credence to the recent cautious rhetoric from central bank speakers.

Equities fluctuated after the S&P 500 came very close to hitting 5,000 for the first time — in a rally that was once again driven by a narrower group of shares. As the earnings season rolled in, Walt Disney Co. and Arm Holdings Plc jumped on upbeat outlooks, while PayPal Holdings Inc. sank on an underwhelming forecast. Treasury 10-year yields rose three basis points to 4.15%. Oil climbed after Israeli Prime Minister Benjamin Netanyahu’s dismissal of a potential cease-fire in the Israel-Hamas war.

Other News

Australian property values could get a boost from fiscal and monetary policies which bolster residential borrowing power. These policies are set to take effect from 2H. Price growth in Brisbane and Perth remains on track to outperform Sydney and Melbourne, given tight supply and lower prices relative to household income.

Sydney and Melbourne home price growth may underperform smaller capital cities in 2024 as higher listings supply offsets affordability tailwinds. For-sale listings recovered with property prices across the bellwether cities in 2H23, easing homebuyer angst. Population growth is expected to slow in 2024, according to government projections. This may reflect political pressure in Australia following rapid living-cost inflation during 2023.

New dwelling supply will remain low in 2024, based on decade-low building approvals in 2023. This may remain an inflationary driver for rents and property prices despite low mortgage affordability. Rent growth won’t be as high as 2023, given our outlook for normalized household size trends in Australia.