To the scoreboard:
Dow: 21,998.99 +5.28 (+0.02%)
S&P 500: 2,464.61 -1.23 (-0.05%)
AUD/USD: 0.7822 -0.0033 (-0.37%)
ASX200 SPI futures (Sept contracts): 5,699 (-5)
Iron ore benchmark 62% fines $US73.68/t (-1.4%)
1. It’s wages day: The ABS releases the June quarter wage price index at 11:30am AEST. Annual wage growth is forecast to remain moderate at 1.9%. It’s a key data point — wage growth directly affects the outlook for domestic consumption, and can be a catalyst for inflation and by extension, the outlook for interest rates. The recent decline of wage growth has also been well-documented. David Scutt’s 10-second guide is here.
2. US dollar finding its mojo: Tensions have eased with North Korea and the data tide is starting to turn. Retail sales beat and NY Fed president William Dudley reiterated the Fed’s plan to begin tapering its balance sheet in September. So the greenback gained big ground against the yen (USD/YEN back over 110) and euro. Amid renewed US dollar strength, the AUD hit a low of around US78 cents overnight with iron ore falling for the second straight session.
3. Good data also drove some action in the bond market: The yield on benchmark US 10-year bonds climbed, rising 6 basis points to 2.27% (still well off their yearly high of 2.6%). But global stocks were steady, and ASX200 futures traders have the local market little-changed after a solid two-day rally to start the week. Commonwealth Bank going ex-dividend may drag on the market at the open, while earnings season is in full swing with 12 companies reporting their full-year results today.
4. Bitcoin cools off: Prices dipped back below $US3,900 overnight before a small rally, and a short time ago it was trading at $US4,068. Bitcoin Cash also dipped and Ethereum fell to $US280. Meanwhile, New York fund manager VanEck has filed a request with the US Securities & Exchange Commission to launch a Bitcoin Exchange Traded Fund (ETF). Previous requests early this year were shut down.
5. Speaking of wages..: If you’re an Aussie and you’re frustrated by low wage growth, you’re not alone — it’s been a consistent theme across global developed markets. Research from the San Francisco division of the US Fed may explain one reason why. It looks at the impact of worker flow; the aggregate discrepancy caused by older, higher paid workers leaving the workforce and being replaced by younger workers on lower wages (hat tip to AxiTrader’s Greg McKenna for the chart):
6. Amazon closes the deal: In order to swallow up Whole Foods, Amazon has tapped the debt market. It finalised a $US16 billion bond issue overnight with maturities from three to 40-years, according to the Financial Times. So far this year companies have accessed the US debt market to the tune of $US1.2 trillion. That’s put pressure on corporate bond yields, with spreads between corporate and government debt widening by seven basis points over the past week.
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