Originally published by The Commonwealth Bank of Australia
■At least we have Game of Thrones to look forward to. Monday’s trading session felt like a public holiday. You know that feeling when you accidentally turn up to work and it’s a ghost town. Well, that was today, but with a full house.
| ■ | Trump administration headlines go from worse to worse, and we simply ignore the madness. Steve the madman Bannon, gone, and Carl the Icon Icahn, gone. Credibility is unchanged off, well, a pretty low base. |
| ■ | Across the Tasman the Kiwi election is heating up, with Labour’s new leader, Jacinda Ardern, striking a chord with voters. National opens the cheque book in response. Winston is simply loving it. |
■The Bledisloe cup match was a game of two halves. In the first half, the Wallabies were half as good as the All Blacks. In the second half, the All Black bench was half as good as the All Blacks.
Aussie bonds kicked off a likely quiet week with a small sell‑off today. Yields barely moved after rising marginally at the open. The domestic bond market will follow offshore leads this week, given an almost empty eco data calendar. All eyes turn to Jackson Hole. The highlights of the week will come at the end, with Jackson Hole on Friday and Saturday. Yellen speaks at 3pm of Friday, Sydney time. Yields are likely to be range bound and trading on headlines/tweets. Commodity markets are encouragingly strong and supportive of Aussie economy and currency...
The recent uptrend in iron ore prices remained intact. Following a surge on Friday night, Iron ore futures, listed on the Dalian Commodity Exchange with delivery in January 2018, have marched higher by 6.8% so far today.
On Friday night, US Treasury yields were a touch higher over a quiet session. The ousting of Steven Bannon made the headlines. Financial markets viewed the news positively. Whether or not recent personnel changes in Trump’s administration will lead to a traditional White House remains debatable.
Across the Tasman, the Kiwi election is heating up, with Labour’s new leader, Jacinda Ardern, striking a chord with voters. The Stuff.co.nz poll of polls shows Labour gaining swiftly in the polling. The Greens are dying a slow death, and are currently below the 5% minimum. The Nationals are opening the cheque book in response. Spending announcements are coming thick and fast, and the Government has ample ammunition. The election campaign has turned into a lolly scramble, and the milk bottles and Manukau lozenges are landing across the country. From an economic perspective, the already announced family package from National is large. The fiscal impulse can only grow from here. From a markets’ perspective, there is generally a market preference for National (slightly) to Labour, in the same way Republicans are preferable in the US, well up until now.
To make matters worse for the incumbent, United Future Leader Peter Dunne has quit, leaving the party Disunited without future. United Future have haemorrhaged votes to Labour, and leaves the Nationals to try and pick up the pieces. National can only form a coalition with Winston now. And Winston is simply loving it. Winston Peters continues to be in a good position to be kingmaker for the next government. A position he is all too familiar with, and bloody good at to be fair.
Source: Stuff.co.nz
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