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Investors bail on bond moves

Shares sank in overnight trading as the US dollar held higher ground and US bond yields persisted above break out levels. The reality of higher interest rates appeared to bite investors, and stock market indicators across Europe and the Americas flashed red. Regional markets face a choppy day ahead of important data releases.

Both the US ten and thirty year bonds traded at seven year low prices for a second session, reducing the likelihood of a false break. Durable goods and factory orders dropped broadly in line with forecasts that paint a stronger economic picture. Expectations that tonight’s non-farm payrolls will fall to 185,000 jobs due to hurricane effects points to potential upside surprise on the numbers. If this is the case the US currency and bond yields could push higher again, further rattling investors.

Japanese wages data due this morning may add weight to the Yen if they confirm a projected fall in August. Nikkei futures are pointing to a slip below 24,000 for the index.

Australian retail sales numbers due late morning could also have an impact. Adding to the consumer focus is the suspension from trading of Wesfarmers shares ahead of an announcement about the divestment of Coles’ supermarkets. The Australian share market has traded surprisingly strongly over the last two days. Consistently negative leads from international investors and industrial commodities may see the outperformance end today.

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