Mixed European data and stronger US retail sales triggered a global bond market sell off overnight. US ten year bonds broke through an important level, the US dollar jumped and gold slipped below US $1300. Although the selling of safe haven assets reflects improving growth prospects, shares fell as investors focused on the potential for sharply higher interest rates.
European numbers balanced out. German GDP came in below forecast, but French inflation is hotter than expected. However it was the upward revision of March retail sales in the US that sparked the sell-off that pushed ten year yields up 8 basis points to break through the 3.05%, signalling a bear market for bonds:
US Ten Year Bond (Yield) – weekly, 2013-present
Steady European share trading gave way to a US rout. Futures market are pointing to opening losses across the Asia pacific region. However the severity of downward pressure could be mitigated by the impact of lower regional currencies.
Australian investors will look to today’s wages data as a harbinger of potential RBA action. Salary growth for the first quarter is estimated at 2.1% pa. A higher reading would exacerbate pressure on local bonds. A2 Milk this morning gave guidance for the full year. The range of NZ $900-$920 million is below the consensus forecast closer to $950 million, and the shares have shed 20% in early New Zealand trading.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.