Markets Overview
- ASX SPI 200 futures up 0.6% to 7,992.00
- Dow Average up 0.6% to 40,000.90
- Aussie up 0.2% to 0.6774 per US$
- US 10-year yield fell 2.7bps to 4.1829%
- Australia 3-year bond yield fell 5.8 bps to 4.05%
- Australia 10-year bond yield fell 5 bps to 4.32%
- Gold spot down 0.2% to $2,411.43
- Brent futures down 0.4% to $85.03/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$300 Million 1.75% 2051 Bonds
US stock futures fluctuated after the attempted assassination of Donald Trump reinforced speculation that his chances of winning the November presidential election have increased.
S&P 500 contracts were little changed in early Asian trading. The US dollar edged up against most currencies. Bitcoin topped $60,000 in the wake of the attack. Asian stocks were set for a mixed start after futures in Australia and China rose on Friday while those in Hong Kong slipped.
Cash trading of US bonds is closed in Asia due to a holiday in Japan. US Treasury futures fell, indicating yields will rise when cash trading begins in London. Australian bond yields edged lower, following US Treasuries on Friday.
In the aftermath of Saturday’s attack — with images of a defiant Trump with his fist raised over his head and his bloody right ear — chances of him becoming president again increased, according to PredictIt data.
Trump’s support for looser fiscal policy and higher tariffs are generally viewed as likely to benefit the dollar and weaken Treasuries. Yields surged in the wake of Joe Biden’s poor debate performance last month, showing the sensitivity of Treasuries — particularly longer-dated securities.
Other News
Australia will deliver a second budget surplus of billions of dollars in the “mid-teens,” according to the nation’s Treasurer.
Official figures would come in September, Treasurer Jim Chalmers told Sky News on Sunday. “We already know enough about it to expect that Labor’s second surplus will be somewhere around the mid-teens,” Chalmers said. “That could be the biggest back-to-back surpluses on record.”
Typically, a budget surplus in Australia is a victory for the government as it indicates strong oversight — even if driven by external forces such as higher commodity prices. The budget is expected to swing back into deficit in subsequent years as a structural shortfall and weaker economy take a toll. Meanwhile, inflation remains sticky and further interest rate rises are possible.
“The governor of the Reserve Bank has said those two surpluses are really important,” Chalmers said. “They’re helping put downward pressure on inflation.”
The Reserve Bank of Australia meets next Aug. 5-6. Market pricing implies a 65% chance of a hike to 4.6% this year, though a Bloomberg survey from June 28 to July 1 showed a majority of economists expected the RBA to keep the cash rate steady. That’s a contrast to the US, where rate cuts are expected.
“The Americans are a little bit ahead because they peaked higher and earlier,” he said. “We’ve all got some version of these inflation challenges.”
(Bloomberg)
