Markets Overview
- ASX SPI 200 futures up 0.3% to 8,611.00
- Dow Average up 0.8% to 44,828.53
- Aussie down 0.2% to 0.6572 per US$
- US 10-year yield rose 6.9bps to 4.3457%
- Australia 3-year bond yield rose 1.9 bps to 3.32%
- Australia 10-year bond yield rose 3 bps to 4.18%
- Gold spot down 0.9% to $3,326.76
- Brent futures down 0.3% to $68.88/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$1 Billion 2.25% 2028 Bonds
- 11:30: (AU) May Household Spending YoY, est. 3.5%, prior 3.7%
- 11:30: (AU) May Household Spending MoM, est. 0.5%, prior 0.1%
Asian equities were set to climb Friday following fresh highs for US stocks as strong jobs data eased concerns the economy slowing down.
Equity-index futures for Japan and Australia rose, while those for Hong Kong were fractionally lower. The S&P 500 gained 0.8% and the Nasdaq 100 advanced 1% Thursday, leaving each index at the highest closing level on record in a shortened session ahead of Friday’s Independence Day holiday.
US markets closed prior to the House passing President Donald Trump’s tax bill that had weeks earlier sparked concerns over rising deficits. Separately, Trump also said his administration may begin sending out letters to trading partners as soon as Friday setting unilateral tariff rates ahead of a July 9 deadline for negotiations.
Treasuries fell and the dollar rose Thursday in a sign traders see less pressure on the Federal Reserve to cut interest rates after US jobs growth exceeded expectations in June. Swap traders saw almost no chance of a July Fed cut, compared with a roughly 25% probability seen before the data. The chance of a move in September ebbed to about 70%.
“The solid June jobs report confirms that the labor market remains resolute and slams the door shut on a July rate cut,” said Jeff Schulze at ClearBridge Investments. “A wage-price inflationary spiral shouldn’t be a near-term concern, setting up something resembling a ‘Goldilocks’ scenario.”
Meanwhile, Trump secured a sweeping shift in US domestic policy as the House passed a $3.4 trillion fiscal package that cuts taxes, curtails spending on safety-net programs. The 218-214 vote in the House Thursday sends the legislation to Trump, in time for a July 4 deadline he set.
The president said he plans to sign the bill on Friday at a 4 p.m. ceremony at the White House.
A $5 trillion increase in the US debt limit in the package eliminates the risk of a market-rattling payment default the Treasury had forecast could come as soon as mid-August without congressional action.
“The removal of the risk that the Treasury Department would exhaust the capacity to fund itself is a highly welcome development for all market players,” Chris Weston, head of research at Pepperstone Group, wrote in a note. “The Treasury department will soon look to ramp up bill issuance.”
In Asia, Hong Kong’s de-facto central bank bought the city’s dollar again to defend its foreign-exchange peg. The Hong Kong dollar has had a wild ride recently with two previous rounds of intervention failing to send funding costs high enough to dampen bearish currency bets.
Separately, Treasury Secretary Scott Bessent on Thursday questioned Fed officials’ judgment on rates, reiterating his view that two-year yields are a signal their benchmark rate is too high.
“The committee seems to be a little off here in their judgment,” Bessent said in an interview on Fox Business, referring to the Fed’s rate-setting Federal Open Market Committee.
Headline numbers from the June jobs report took pressure off the Fed to consider a rate cut later this month, but the solid figures masked weakness in private payrolls and other potential warning signs of deterioration in the labor market. That’s a trend that could raise the stakes later in the year.
