Markets Overview
- ASX SPI 200 futures down 0.4% to 8,358.00
- Dow Average up 0.4% to 43,246.60
- Aussie up 0.4% to 0.6696 per US$
- US 10-year yield rose 7.4bps to 4.0866%
- Australia 3-year bond yield rose 5.4 bps to 3.81%
- Australia 10-year bond yield rose 4.4 bps to 4.25%
- Gold spot up 0.7% to $2,692.55
- Brent futures up 0.4% to $74.55/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$500 Million 4.75% 2027 Bonds
A selloff in Treasuries strengthened the dollar and left equities mixed as new signs of economic vigor led traders to trim expectations for US rate cuts.
Shares in Asia look set for a mixed open on Friday with contracts for Japanese benchmarks advancing, helped along by a weaker yen, while those for Australia and Hong Kong fell. The S&P 500 ended the day little changed after early gains that pushed the index to an all-time high fizzled out.
Swaps traders further reduced bets on Federal Reserve rate cuts in the remaining two meetings of the year. A jump in Treasury yields pushed an index of dollar strength higher for a fourth day to the highest level since early August. Australian and New Zealand yields climbed in early Friday trading, tracking the moves.
The shift in forecasts reflected robust US retail sales in September that exceeded expectations, illustrating resilient consumer spending that continues to power the economy. The data followed a blowout jobs report and a hotter-than-estimated consumer inflation print released earlier this month that only reinforced the view the US is nowhere near a recession.
“There’s a narrow path toward a Fed pause in November, but it would likely require every notable economic report between now and then indicating a stronger-than-assumed US economy,” said Matthew Weller at Forex.com and City Index. “Regardless of what the Fed does in November though, the projected path for interest rates looking out into 2025 and beyond is higher than it’s been in weeks.”
In Asia, investors will firmly be focusing on China, with gross domestic product data for the third quarter expected to reveal the slowest pace of growth in six quarters. Home prices, industrial production and retail sales data are also set for release Friday, providing further clarity for investors grappling with the economic support measures unveiled in the prior weeks that have sent Chinese equities whipsawing.
Elsewhere in the region, Japanese inflation is expected to show a decline on a headline basis, but little change excluding fresh food and energy prices. Traders will be monitoring the yen, which passed the psychological level of 150 per dollar, bringing back the risk of intervention by Japan back into focus.
In US corporate news, Netflix Inc. rallied in late trading as subscriber additions beat estimates. Nvidia gained after a bullish outlook from Taiwan Semiconductor Manufacturing Co. Travelers Cos. surged 9% on profit that tripled to $1.3 billion from a year earlier. Elevance Health Inc. tumbled 11% as the insurer cut its annual outlook.
