Morning Report APAC: US yields put pressure on shares
- Asian stocks dipped, challenged by a surge in US bond yields
- 10-year Treasuries yield at 2.79%, up about 13 basis points this week
- US employment report is the next pitstop for active traders
- They will be paying attention to wages with a view to labour costs
1800 – EUR: ECB’s Coeure Speaks in Kranj, Slovenia
Treasury yields rally: 10 Year Treasury yields touched 2.80%, the highest level since 2014 and the 30-year broke 3.00% for the first time in 8 months.
Pension Funds have been inactive in the bond market for the past few days helping the bond selloff. The 5-30 year spread is touching fresh lows and is now at 45 basis points after being at 40 bps two days ago. Levels not seen since 2007.
Strong US ISM, but low productivity: ISM Manufacturing came in better than expected at 59.1 (expected: 58.6) from 59.3.
The details show that new orders and production - remained near post-recession highs. New orders moderated to 65.4 from 67.4 prior and production dipped to 64.5 from 65.2.
US worker productivity unexpectedly fell in the fourth quarter to -0.1%, the first decline since early 2016 and an indication that it be difficult to boost annual economic growth to 3% on a sustainable basis.
Unit labor costs, the price of labor per single unit of output, rose at a pace of 2% pace in the final three months of 2017 after slipping at a rate of 0.1% in the third quarter.
For those looking for arguments that inflation won’t pick up sustainably: compared to the fourth quarter of 2016, unit labor costs rose at a rate of 1.3%.
They gained 0.2% in 2017, the smallest increase since 2010, after rising 1.1% in 2016.
India bond sell-off: Indian bonds got crushed after the government widened its deficit targets to free up cash before elections next year.
The shortfall will be 3.5% of GDP this year and 3.3% next. The yield on 10-year debt rose to 7.61%, the highest closing level since March 2016.
– Edited by Adam Courtenay
This report was compiled by the Saxo APAC Sales trading team in Singapore – the home of social trading. Follow the team on @SaxoStrats or post your comment below to engage with Saxo Bank's social trading platform. Follow us on @SaxoStrats on Twitter
All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.
None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.
Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.
Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at saxomarkets.com.sg. If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M