Originally published by Rivkin Securities
After their long weekend, US stock markets fell on Tuesday with the Dow Jones Industrial Average falling 1.0% and the S&P 500 down 0.6%. The Nasdaq 100 was the outlier, managing to close flat after being higher for most of the trading session.
The minutes from the most recent monetary policy meeting of the Reserve Bank of Australia (RBA) were released yesterday which showed that the RBA is waiting for a pick-up in wages before it will raise interest rates. Wages growth in Australia has been very lacklustre recently despite a relatively strong jobs market. The RBA also noted that although inflation is currently a little lower than expected, it should pick up as wages rise. Later today, the Australian Wage Price Index growth for the December quarter will be released. It is expected to show an increase of 0.5%, in line with the previous quarter.
The gold price was pummelled overnight, falling 1.75%, as a rising US dollar took some of the shine out of the precious metal. Silver was also hit, but was down only 1.44%. The US dollar has bounced from its recent lows, the US Dollar Index (DXY) climbing 0.6% overnight. As a result, the Australian dollar fell to US$0.788.
The US 10-year bond yield has remained steady at around 2.89%. Volatility in bond prices has dropped substantially over the past week relative to that in early February and the US 10-year yield is now just above the equivalent Australian bond yield and assuming that the Reserve Bank doesn’t begin raising rates, this situation should persist.
Data Releases:
- Australia Wage Price Index 11:30am AEDT