Markets Overview

  • ASX SPI 200 futures down 1.0% to 8,328.00
  • Dow Average down 1.9% to 41,860.44
  • Aussie up 0.2% to 0.6437 per US$
  • US 10-year yield rose 11.2bps to 4.5985%
  • Australia 3-year bond yield rose 0.7 bps to 3.48%
  • Australia 10-year bond yield rose 4.9 bps to 4.45%
  • Gold spot up 0.8% to $3,315.66
  • Brent futures down 1.1% to $64.65/bbl

Economic Events

  • 09:00: (AU) May S&P Global Australia PMI Services prior 51.0
  • 09:00: (AU) May S&P Global Australia PMI Composite, prior 51.0
  • 09:00: (AU) May S&P Global Australia PMI Manufacturing, prior 51.7
  • 10:30: (AU) Australia to Sell A$1 Billion 77-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 126-Day Bills
  • 11:00: (AU) Australia to Sell A$100 Million 2% 2035 Inflation-Linked Bonds
  • 18:30: (AU) RBA’s Hauser-Speech

Asian equities were primed to fall Thursday after US stocks, government bonds and the dollar weakened on concerns about Washington’s ballooning deficit.

Equity-index futures for Japan, Australia and Hong Kong were all lower early Thursday in Asia. The S&P 500 closed down 1.6% on Wednesday, its sharpest slide in a month, while the Nasdaq 100 dropped 1.3%. Treasuries fell across the curve Wednesday with long-term debt bearing the brunt as the 30-year yield rose 12 basis points. An index of the dollar fell 0.3% as traditional safe haven assets yen, Swiss franc and gold strengthened.

Tepid demand for a $16 billion sale of 20-year bonds rekindled fears over US government borrowing and budget deficit, weighing on the dollar. The action sapped sentiment after a sharp rebound in risk assets over the past month and revealed structural concerns in the bond market.

“The soft 20-year auction fueled additional weakness,” said Michael O’Rourke, chief market strategist at JonesTrading. “It has been a theme all week starting with the Moody’s downgrade. Additionally, there is the deficit/budget debate being fought in the background of this environment.”

In Asia, investors will be monitoring the Korean won after the currency jumped to a six-month high. Local media had reported that the US believes a relatively weak won is a fundamental cause of South Korea’s trade surplus.

Elsewhere, Baidu Inc. posted a surprise rise in revenue after the Chinese internet search leader fended off intensifying competition in AI and benefited from demand for computing in the post-DeepSeek Chinese AI development boom.

Data set for release in the region includes inflation for Malaysia and Hong Kong, the budget for New Zealand and unemployment in Taiwan. Bank of Japan official Asahi Noguchi will speak later Thursday.

In commodities, gold rose for a third session Wednesday, supported by the weaker dollar and concerns over conflict in the Middle East. Oil dropped after a second consecutive weekly gain in US crude inventories. Meanwhile, Bitcoin briefly hit an all-time high.

Traders have been piling into bets that long-term bond yields would surge on concerns over the US’s swelling debt and deficits, with Moody’s Ratings on Friday lowering the nation’s credit score below the top triple-A level. For many, the message was: Unless America gets its finances in order, the perceived risks of lending to the government will rise.

The White House ramped up the pressure on Republicans on Wednesday urging lawmakers to quickly approve President Donald Trump’s signature tax bill, adding that a failure to do so would be the “ultimate betrayal.”

Former Treasury Secretary Steven Mnuchin said he’s more alarmed by the country’s growing budget deficit than its trade imbalances, and urged Washington to prioritize fiscal repair. “The budget deficit is a larger concern to me than the trade deficit,” he said during a panel discussion at the Qatar Economic Forum on Wednesday. “I hope we do get more spending cuts.”

The murky economic outlook has fueled hedging activity in Treasury options, with investors targeting higher rates on longer-dated bonds by the end of the year. Those wagers echo sentiment on Wall Street, where strategists from Goldman Sachs Group Inc. to JPMorgan Chase & Co. are lifting their forecasts for yields.

“These higher yields make it much tougher to justify today’s very high valuation levels,” said Matt Maley at Miller Tabak. “So, it’s something that will likely create some renewed headwinds for stocks.”