As the North American session begins, the CHF (and AUD) is the strongest and the GBP is the weakest. The USD is also weaker to start the US session. Yields are lower on the day (but still near the high for the day) helping the negative bias. The US treasury will complete the coupon auctions today with the sale of 30 year bonds. Yesterday, I gave the 10-year note auction a D- great. I think Rick Santilli gave it a D+ or C-. It was not that. The tail was over 3 basis points. The bid to cover was higher than average. The domestic and international buyers were below average. It was below average and close to failing. Will the buyers come out for the longer issue? Stay tuned at 1 PM ET. PS the auction helped to put a cap on the stock market yesterday. Major indices closed the day near the lows for the day.
Last night, RBA Governor Michele Bullock reiterated the Reserve Bank of Australia's vigilance towards inflation risks, stating that they will not hesitate to hike interest rates if necessary. She said that the current interest rates still align with the RBA's inflation mandate. However, she does not expect inflation to return to the 2-3% target range until the end of 2025. Bullock also highlighted the economic benefits of investing in renewable energy, which is crucial for mitigating climate change risks. She noted that increasing weather volatility and rising temperatures pose significant challenges for farmers. While interest rates are not expected to decrease quickly, Bullock balanced her comments by saying that the RBA would consider cutting rates if the economy turns down faster than anticipated. Nevertheless, after the RBA rate decision this week, the market is taking comments as more hawkish.
Looking at the AUDUSD hourly chart below the price bounced off the 100-hour MA at session lows and ran back up toward the high from yesterday and the 50% of the move down from the July high at 0.65733. There is also overhead resistance defined by the 100 and 200 day MAs between 0.6592 to 0.6600.
Yesterday, I did a special video talking about the 100/200 hour MAs and why they are so important. You can watch by clicking on the video below. Take a look and learn.
Today, stocks are mixed to start the day in the pre-market trading. The S&P and Nasdaq are now near unchanged in up and down trading. The Dow is still lower.
The US initial jobless claims will be of interest with expectations of 240K vs 249K last week. The continuing claims are expected at 1.870M vs 1.877M last week. The Federal Reserve has said that they are more balance with their mandate as inflation risks have come down while the inflation risks have increased.
Wholesale inventories for the month of June will also be released with patients of 0.2% versus 0.6% last month. The wholesale sales are expected 0.3% versus 0.4%.
Richmond Fed Pres Barkin is expected to speak at 3 PM ET. After the US jobs report on Friday, Barkin told the New York Times:
"More significant reductions typically would be associated with an economy that feels like it's deteriorating rapidly. And again, 114,000 jobs, while not as good as we've been running, on a long-term basis, is a reasonable number,"
A snapshot of the other markets as the North American session begins shows:
In the premarket, the snapshot of the major indices are mixed/little changed.
The small-cap Russell 2000 fell -29.19 points or -1.41% at 2035.10
European stock indices are trading lower:
Shares in the Asian Pacific markets closed mixed:
Looking at the US debt market, yields are moving lower:
Looking at the treasury yield curve, the spreads are steepening with the 2- 10 year spread only negative by -7.1 basis points
In the European debt market, the benchmark 10-year yields are moving higher: