Good morning and happy Friday.
To the scoreboard:
Dow: 26,148.63 -0.76 (0.00%)
S&P 500: 2,818.88 -4.93 (-0.17%)
AUD/USD: 0.8044 -0.0011 (-0.14%)
ASX200 SPI futures (March contracts): 6,023 (-13)
1. Bond yields rise again: US stocks struggled for traction overnight as markets took notice of another round of bond selling, with benchmark US 10-year bond yields now at a new four-year high of 2.79% – just six basis points shy of Aussie 10-years. As credit conditions tighten, this indicator designed to track the speed of deterioration in credit markets is flashing a warning sign for stocks. Here’s the overnight move in US 10-years:
2. The AUD remains under mild downside pressure, and briefly fell below US80 cents overnight before rallying back. The US dollar is still in the doldrums and it was another strong session for the euro, as January PMI confirmed that while the US economy looks sound, the synchronised global growth outlook means other major markets — China, Japan and Europe — are also gaining momentum.
3. Crypto meltdown: Amid a broad crypto selloff, Bitcoin slumped more than 10% and is back under $US9,000. It’s now lost around $US72 billion in value so far this year. The latest falls come as India announced it does not recognise Bitcoin as legal tender, while lingering concerns remain about Tether — the controversial crypto supposedly pegged to the dollar, which some argue has been serving to artificially prop up Bitcoin’s price.
4. Crude oil rose by 1% overnight and is holding just shy of $US70 a barrel, as the latest compliance report indicated OPEC member nations are adhering to their production-cut agreement. According to Goldman Sachs, it’s the best time to invest in commodities in a decade, and the bank has raised its 6-month price targets for oil and copper.
5. The day ahead: US tech earnings season is in full swing, with three of the biggest companies in the world — Alphabet (Google’s parent), Apple and Amazon — all set to report earnings this morning Australian time, after markets close in the US. Domestically there’s quarterly PPI data, and later tonight all eyes will be on monthly employment data out of the US.
6. Bubble trouble? The “B” word has been thrown around a lot recently for multiple asset classes — stocks are at record highs, and bonds are only just breaking out of a long-term bull market. Here’s a quick summary of all the Wall Street analysts who are concerned about high asset valuations. And a top Wall Street executive — who wished to remain anonymous — has told Business Insider of two key risks that could derail global economic growth this year.
Have a great weekend.