Markets Overview

  • ASX SPI 200 futures down 0.3% to 7,723.00
  • Dow Average up 0.1% to 39,169.52
  • Aussie down 0.2% to 0.6659 per US$
  • US 10-year yield rose 6.7bps to 4.4633%
  • Australia 3-year bond yield rose 4.6 bps to 4.13%
  • Australia 10-year bond yield rose 7.2 bps to 4.38%
  • Gold spot up 0.2% to $2,331.78
  • Brent futures up 2.0% to $86.67/bbl

Economic Events

  • 11:30: (AU) RBA Minutes of June Policy Meeting

Stocks in Asia are set to fall, while bonds in the region are likely to track Treasuries lower as traders weighed the possibility of another Trump presidency in the wake of his debate with Joe Biden last week.

Tokyo and Sydney equities were on track to open lower, with Hong Kong shares to reopen after a holiday. With many investors keeping a watchful eye on news regarding the presidential race, Treasuries fell — with longer-term maturities largely underperforming shorter ones. 10-year yields approached 4.5%. US stocks edged mildly higher amid a rally in tech megacaps. The dollar rose.

Bloomberg News reported the Democratic National Committee is considering formally nominating Biden as early as mid-July to ensure he’s on November ballots. Elsewhere, a divided Supreme Court ruled that Trump has some immunity from criminal charges for trying to reverse the 2020 election results, all but ensuring that a trial won’t happen before the November election.

Investors are now looking toward the US election as an even bigger potential market event given that it currently appears Trump’s chances of retaking the White House have meaningfully improved, according to Ian Lyngen and Vail Hartman at BMO Capital Markets.

In China, pessimism about the domestic economy has sparked a surge in demand for government bonds. The central bank said it will borrow government bonds from primary dealers, a sign it may be contemplating selling securities to cool down the rally.

Meanwhile, the prospect of a Bank of Japan interest rate hike coming later this month increased after an index showed confidence among the nation’s large manufacturers rose from three months earlier.

In Europe, ECB President Christine Lagarde signaled that there is not sufficient evidence that inflation threats have passed, feeding expectations that officials will take a break from cutting interest rates this month. The euro climbed as French election results suggested there’s a smaller probability of extreme policies coming from the far-right.


Other News

Australia dealt a severe blow to international students Monday by raising visa application fees by 125% to boost the “integrity” of its fourth-largest export and help slow overall migration.

The increase to A$1,600 ($1,067) per application, from A$710 starting July 1, will help “create a migration system which is fairer, smaller and better able to deliver for Australia,” Home Affairs Minister Clare O’ Neil said in a statement. Other migration-related measures also came into effect on Monday.

Australia has one of the biggest international education sectors in the world, worth about A$48 billion a year, or 7% of total exports. International graduates account for one-third of the nation’s permanent skilled migrant intake, according to the Grattan Institute.

The extra revenue will be used to help implement measures including government’s funding of Australian students’ education as well as financial support for local apprentices and employers, the government said.

Vicki Thomson, chief executive of the Group of Eight which represents Australia’s top universities, said the government is making a “critical mistake by using international students as a scapegoat to manage a short-term spike in migration and ease housing pressure.”

“It is death by a thousand cuts to our most successful services export sector,” Thomson said in a statement.

An influx in arrivals since borders reopened after the pandemic is running headlong into a chronic shortage of homes to accommodate them, forcing the government to limit the inflow. Migration is expected to be a key plank on which Australia’s 2025 election will be fought, with opposition leader Peter Dutton also promising measures to slash migrant numbers.

International student numbers have surged since the pandemic to more than 650,000, well above pre-Covid levels and nearly double where they were almost a decade ago. Australia has more than three times the number of international students, per head of population, than either Canada or the UK, according to Grattan.

These previously announced migration policies also took effect:

  • Raising the Temporary Skilled Migration Income Threshold to A$73,150 from from A$70,000 based on annual indexation
  • Shortening the duration of Temporary Graduate Visas and reducing the age eligibility
  • Ending “visa hopping” by closing the loopholes that allow students and other temporary visa holders to continuously extend their stay in Australia, in some cases indefinitely
  • Extending the length of time temporary skilled migrants can remain in Australia between employer sponsors to 180 days from 60 days
  • Implementing the Strengthening Employer Compliance Bill 2023 against employers engaging in the exploitation of migrants
  • Introducing the Workplace Justice Visa Pilot to enable temporary visa holders to remain in Australia for a short period when pursuing workplace justice