The US 10-year Treasury yield jumped to 16-year highs overnight on growing talk the Fed will have to hike again. Risk-sensitive currencies are also weak on China’s rapid slowdown.
In an extended bonus deep-dive interview, ANZ’s Group Chief Economist Richard Yetsenga looks at why China’s stimulus isn’t working this time around.
5 things to know
The US 10-year Treasury yield rose six basis points to as high as 4.33% overnight, its highest level since November 2007 after FOMC minutes showed some members saw “significant upside risks to inflation, which could require further tightening of monetary policy”. It’s closing around 4.29%.
ANZ’s Head of G3 Economics Brian Martin says the pressure is building on the Fed to look closer at hiking, although not quite as early as next month. Yet.
Rates-driven US dollar strength and China’s rapidly slowing economy are pushing down commodity and risk-sensitive currencies such as the Aussie and Kiwi dollars. The A$ fell under 64USc yesterday and is just on 64 USc this morning. The NZ$ is well under 60 USc at 59.3 USc this morning.
ANZ’s Senior Australian Economist Adelaide Timbrell says slower-than-forecast Australian jobs data yesterday fits with the RBA’s views about pausing rates.
ANZ’s Head of FX Research Mahjabeen Zaman says currency markets are watching the People’s Bank of China today for more signs it has to support China’s renminbi (CNH).
Cheers
Bernard
PS: Have a great weekend. Look out on Monday for a deep dive interview with Adelaide Timbrell on Australia’s bouncing housing market.
