HERE'S OVERNIGHT MARKET UPDATE: The US bond yields increased after US retail sales and consumer confidence grew more than forecasts reducing the appeal of safe-haven assets. The less-than-forecast demand for the $74bn of bonds sold by US last week also weighed on the Treasuries. The 2-year yield increased 3bps to 0.798%, whilst the 10-year yield gained 5bps to 3.550%.
The Australian bond futures moved in line with US Treasuries, underperforming at the long end of the curve. The implied yield on 3-year bond futures was up 5bps to 4.970% (price down 5bps to 95.030) and the implied yield on the 10-year bond futures was up 1bps to 5.540% (price down 1bps to 94.460).
The US equities were higher on Friday on the back of better-than-estimated U.S. retail sales and consumer confidence data, bolstering optimism that the economic recovery is strengthening. The DJIA was up 0.6% to 10472, the S&P 500 rose 0.4% to 1106 and the Nasdaq closed flat at 2190.
The European equities advanced as China’s industrial output, US retail sales and consumer confidence increased more than forecast triggering a rally in commodity stocks. The DJ Euro Stoxx 50 rose 0.4% to 2862, the German DAX increased 0.8% to 5756 and the FTSE was up 0.3%, at 5262.
The Australian SPI 200 Dec 09 futures contract was down 3 points or 0.1% to 4656.
The USD rallied against the major crosses on Friday as US retail sales and consumer confidence figures released were stronger then expected, triggering speculation that the Fed will raise rates in 2010. EUR/USD dipped below its two-month low of 1.4648 overnight and is currently trading at 1.4629 on Monday. GBP/USD is trading weaker at 1.6247, falling Friday on concerns of the swelling UK budget deficit. USD/JPY is trading lower at 88.91 after reaching an overnight high of 89.81.
The AUD was trading higher against its major counterparts on Friday after China’s industrial production increased, boosting demand for higher-yielding assets. AUD/USD dipped to a low of 0.9091 but pared losses and is trading higher at 0.9127. AUD/EUR gained steadily overnight and opens today’s session at 0.6237. AUD/JPY opens at 81.10 after a choppy session and AUD/NZD opens today’s trading lower at 1.2592.
The Crude oil trades below $70 a barrel as the US dollar strengthened, decreasing the appeal of commodities. WTI futures contract for January fell 0.9% to US$69.87 a barrel.
The Spot gold decreased as the US dollar rebounded, eroding the appeal of the metal as an alternative asset. Spot gold fell 1.4% to US$1,115.40 an ounce.
The LME copper December futures increased 0.4% to US$6,835 a tonne, after China’s industrial output rose more than forecast, spurring optimism that demand for the metal will increase. Other base metal futures traded positive with zinc, aluminium, nickel and lead increasing 1.2%, 3.3%, 2.0% and 1.1%, respectively.
The US corn and soybean rose 2.9% and 0.8% respectively on speculation that surging economic growth in China will boost demand for food and animal feed. Wheat rose 0.3% on expectation that cold weather will harm crops in Ukraine and Russia due to inadequate snow cover. Sugar surged 3.2% on concerns that supplies from Brazil and India will be less than forecasts. Palm oil futures are up 0.6%.
