US bonds sold off aggressively overnight on the ‘higher-for-longer’ view after a government shutdown was averted and US factory activity was above forecasts.
In our bonus deep-dive interview, ANZ’s Head of G3 Economics Brian Martin explains how US fiscal and monetary policy is being projected around the world.
5 things to know
The US 10-year Treasury bond yield rose 12 bps to 16-year high of 4.71% overnight. The US$ rose vs most currencies. The A$ fell to 63.7 USc from 64.3c. The NZ$ fell to 59.5 USc from 60c. Brent futures fell 1.5% to $91.60. Markets now see a 50% chance of a Fed hike in December. Stocks fell 0.5-1%.
The yen fell to 149.9 this morning, almost at the key 150 level seen triggering intervention. Japan’s finance minister Shinichi Suzuki said yesterday he’s watching the yen with a ‘strong sense of urgency’. The Bank of Japan also bought JGBs to contain the 10-year yield at 0.77%, a 10-year high.
The ISM index for US factory activity in September rose to 49.0 points from 47.6 in August. Brian says it was the best in 10 months.
European core inflation was 0.2% in September for the third month running. European factory also moderated. That helps the ECB hold rates, says Brian.
Indonesia’s annual inflation rate fell to 2.28% in September, which was its lowest level since February 2022, says ANZ Asia Economist Krystal Tan.
Bernard
PS: Look out tomorrow for the latest on the RBA decision today and a preview of tomorrow’s RBNZ decision. Both are seen holding hawkishly.
