Markets Overview
- ASX SPI 200 futures up 0.3% to 7,104.00
- Dow Average up 0.7% to 35,188.65
- Aussie up 0.7% to 0.6561 per US$
- U.S. 10-year yield fell 1.4bps to 4.4218%
- Australia 3-year bond yield rose 4 bps to 4.13%
- Australia 10-year bond yield rose 4 bps to 4.51%
- Gold spot down 0.1% to $1,978.41
- Brent futures up 2.1% to $82.27/bbl
Economic Events
- 10:00: (AU) RBA’s Bullock-Panel
- 10:45: (AU) RBA’s Schwartz-Speech
- 11:30: (AU) RBA Minutes of Nov. Policy Meeting
The stock market extended its powerful November rally ahead of Nvidia Corp.’s results, with Wall Street also breathing a sigh of relief as a $16 billion sale of 20-year Treasuries lured bond buyers.
Shortly after the auction results, US 10-year yields reversed course and fell to around 4.4%. The S&P 500 closed at the highest since August while the Nasdaq 100 hit a 22-month high. The dollar dropped to an 11-week low.
Traders have also been fixated on Treasury sales, especially after the US recently offered an unusually large premium to sell 30-year securities. Those auctions have been exerting a growing sway over stocks, underscoring how the path of interest rates is gripping markets of late. The 20-year bond auction drew yields of 4.78%, compared with the pre-sale level of 4.79%.
After a more than three-decade hiatus, the Treasury resurrected 20-year bonds in May 2020. Before Monday’s auction, it had not sold the securities during the Thanksgiving week. They’ve traded at a discount to other long-term maturities — which caused a degree of apprehension ahead of the sale.
Other News
Australia’s markets regulator wants companies and directors to prioritize cyber resilience, warning it will take action against businesses that fail to make reasonable investments to protect themselves.
Australian Securities and Investments Commission Chair Joe Longo said this month’s cyberattack on DP World Plc is a “stark reminder” that firms must invest in cyber resilience and be adequately prepared.
“If things go wrong, ASIC will be looking for whether company directors and boards took reasonable steps, and made reasonable investments proportionate to the risks that their business poses, to be prepared for this kind of attack,” Longo said in prepared remarks ahead of a speech in Melbourne on Tuesday. “And if we have reason to believe those steps were not taken, and directors did not act with reasonable care and diligence, we will act.”
DP World, one of the world’s largest port operators, is slowly working through a backlog of more than 20,000 freight containers piled up at Australian ports and labor strikes further impeded a return to normal operations. Australia has been hit with a wave of high profile incidents in the past 18 months, including on health insurer Medibank Private Ltd. and telecommunications giant Optus.
The regulator is also monitoring the performance of Australia’s A$3.5 trillion ($2.3 trillion) pension sector, known locally as superannuation. Longo will use his Tuesday address to warn the industry is poised to take enforcement action against misconduct in the sector. ASIC says 3.5 million Australians will retire in the next decade, with at least A$750 billion of funds shifting from the accumulation phase to the retirement phase.
“Poor marketing, distribution and advice practices leave consumers in sub-optimal investment choices, resulting in poor investment returns,” Longo said in the prepared remarks. “We will take strong action to protect consumers against conduct that is not efficient, honest and fair in this sector.”
(Bloomberg)
