Markets Overview

  • ASX SPI 200 futures up 0.2% to 7,633.00
  • Dow Average down 0.3% to 38,948.02
  • Aussie little changed at 0.6542 per US$
  • U.S. 10-year yield rose 3.4bps to 4.3131%
  • Australia 3-year bond yield rose 0.6 bps to 3.72%
  • Australia 10-year bond yield rose 3.1 bps to 4.13%
  • Gold spot little changed at $2,029.99
  • Brent futures up 1.2% to $83.50/bbl

Economic Events

  • 11:30: (AU) 4Q Construction Work Done, est. 0.6%, prior 1.3%
  • 11:30: (AU) Jan. CPI YoY, est. 3.6%, prior 3.4%

Wall Street saw another busy session of bond sales as issuers looked to borrow before key economic data later this week.

Treasuries were mixed after a $42 billion auction of seven-year notes and a heavy slate of new corporate debt. Seven more issuers came forward to sell US investment-grade bonds, building off Monday’s surge that saw the most deals in a single day so far this year.

Investors are contending with an erosion in expectations for how much the Federal Reserve will lower rates and an onslaught of new corporate issuance that has given yield-seeking investors ample alternatives. Traders no longer expect the Fed to cut rates by more than 75 basis points in 2024, bringing their view in line with what policymakers have indicated as the likeliest outcome.

Shorter-term Treasuries outperformed longer ones. The S&P 500 edged higher.

Other News

Australia’s Trade Minister Don Farrell is confident that a review of heavy tariffs on wine exports to China will be completed by the end of March, the latest test of improving relations between Beijing and Canberra.

Farrell, in his interview with the Australian Broadcasting Corporation on Tuesday, said he met with his Chinese counterpart Commerce Minister Wang Wentao on the sidelines of the World Trade Organization’s conference in the United Arab Emirates on Monday.

“He made it clear that their processes were on track and we would get a result by the end of March,” Farrell told ABC of his meeting with Wang. The Australian official said he hopes to know the result in “a few weeks.”

Warming ties between Canberra and Beijing were recently clouded after Australian writer Yang Hengjun was handed a suspended death sentence in Beijing in early February. Monday’s meeting was the first face-to-face ministerial talks between the two governments since Yang’s sentencing, and Farrell said he had raised the Australian writer’s case with his counterpart.

“We will continue to push on every occasion that we meet our Chinese counterparts for his release and his return to Australia,” the trade chief said.

The five-month review into the tariffs on Australian wine was initiated by the Chinese government in late November. A similar review process with tariffs placed on Australian barley earlier in 2023 had led to a lifting of the sanctions.

(Bloomberg)