Bonds rallied again in Friday night trading as traders anticipated significant central bank responses to the corona virus outbreak. In furthers signs of market concern spot gold prices jumped 2% to a new seven-year high. Share markets around the world reversed previous optimism to send indices tumbling, and cryptocurrencies rose as investors sought alternatives.
US and Australian ten-year bonds are within a few basis points of their all-time lows. This extreme pricing is a signal that interest rate traders expect central banks will take further accommodative steps despite the fact many nations are near the lower bound of conventional monetary policy.
News since the close of trading on Friday may see Asia Pacific markets trade ugly today. Authorities in Hong Kong warned of a potential cataclysm. Italy introduced travel restrictions after Austrian authorities halted a train over concerns that it carried infected Italian citizens. The Australian, New Zealand and Singapore dollars are all trading lower this morning.
The Australian corporate reporting season enters its last week today. Shareholders in G8 Education, Reliance Worldwide and NIB may rue the timing of earnings reports released this morning that are below consensus.