US Treasury yields and stocks fell overnight as weak manufacturing and construction data indicated monetary policy is reducing demand in the US; The Aussie and Kiwi are up as the US dollar fell. Oil fell 3.7% on supply news out of OPEC+. India’s Nifty 50 stocks index rose 3.3% after exit polls indicated a third term for PM Narendra Modi.
In our bonus deep dive interview, ANZ FX Analyst Kausani Basak looks at why imports across Asia have started to improve since bottoming out last year.
5 things to know:
US ISM manufacturing and construction figures were weaker than expected overnight, shunting US Treasury yields down 7-11 bps. ANZ Head of G3 Economics Brian Martin says the manufacturing and construction sectors are very sensitive to interest rates and together account for 15% of US GDP.
The US dollar slid with those lower yields against most currencies overnight. ANZ Head of FX Research Mahjabeen Zaman says it’s all about the US economy for the US dollar this week, ahead of non-farm payrolls on Friday night.
The oil price was down around 3.7% this morning. This followed the OPEC+ group of producers announcing it would restore some earlier production cuts later this year. Brian says there’s also weakness on the demand side of the equation.
Australia’s Fair Work Commission announced a 3.75% increase in the minimum wage and award minimum wages from 1 July. The rise was lower than last year, but exceeded inflation for the first time in three years. ANZ Senior Economist Catherine Birch says the decision will directly affect about a quarter of workers.
The big number to watch in Australia this week is March quarter GDP tomorrow, but before then we get the final pieces of the GDP jigsaw today. ANZ Senior Rates Strategist Jack Chambers says GDP doesn’t normally move markets, but a soft result tomorrow could.
Cheers
Bernard
PS: Catch you tomorrow with how those Australian net exports, current account and company operating profits might affect Q1 GDP.
