Bond Yields Remain Low Despite Stock Recovery

Stock Markets

US stocks fell overnight in one of the few daily declines for 2019. The Dow Jones fell 200 points on the back of global growth concerns. The European Central Bank voiced its concerns about global growth overnight which may have helped fuel the selling in stocks. US bond yields are still low, with the 10-year yield currently at 2.64%, well below last year’s high of 3.23%. This indicates that the bond market is sceptical of future growth prospects. ASX futures are pointing to a lower open this morning, currently down 35 points.

Today’s data releases: US Employment Data, Chinese CPI

Commodities and Currencies

The gold price continues to trade below US$1,300 per ounce following the declines from last week. The Australian dollar gold price, however, has gained support from a falling AUD. The AUD/USD exchange rate fell to $0.701 overnight and threatens to break back below $0.70.

Oil prices rose overnight despite the build in crude stockpiles reported on Thursday. Offsetting this build, however, was a significant drawdown in both gasoline and distillates stockpiles. US shale crude production continues to hover near record highs although a drop in active drilling rig counts in recent weeks points towards an eventual drop in production as production typically lags the rig count.

Later tonight, US employment data will be released with 180,000 jobs expected to have been created. This would be significantly below last month’s figure of 304,000 job but would nevertheless represent a respectable growth rate. The unemployment rate is expected to drop to a historically low rate of 3.9%.

This article was written by William O’Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3633.