To the scoreboard:
Dow: 23,348.74 -85.45 (-0.36%)
S&P 500: 2,572.83 -8.24 (-0.32%)
AUD/USD: 0.7689 +0.0012 (+0.16%)
1. USD falls back: The US dollar index is off by around 0.5% from Friday’s high, amid speculation that the Trump administration’s tax cuts will be phased in slower than expected. The plan has already lost support from a key ally, the National Association of Home Builders. Among the major currencies, the UK pound was the strongest performer ahead of a likely rate hike by the Bank of England this Thursday.
2. Iron ore is crashing: Prices for benchmark 62% fines are back below $US60 a ton for the first time since June, as demand dries up with Chinese steel mills already well-stocked ahead of winter production cuts. The Aussie dollar had a mixed night, with gains against the weaker USD offset by falls against the Euro, Pound and Japanese Yen.
3. Bond yields retreat: The yield on US 10-year bonds fell by 6 basis points to 2.37%. Monday’s PCE figures showed a solid boost in consumer spending, but annual core inflation growth remains subdued at 1.3%, while reports are also strengthening that US President Trump will announce Jerome Powell — seen as a slightly more dovish candidate — as the next chair of the US Federal Reserve on Thursday.
4. Spain united for now: Spanish bonds also rallied, with the yield on Spain’s 10-year government bond falling 9 basis points to 1.49% — the lowest for seven weeks — as opinion polls suggest the Catalan region will vote against independence in December.
5. Mixed session for stocks: European stocks climbed, led by Spanish equities which responded to the weekend’s political developments with a 2.44% gain, following a 1.5% fall on Friday. The US had political events of its own as two members of the Trump administration were indicted by a grand jury, with US stocks falling back from recent record highs.
6. Data today: Domestic data will be led by HIA’s new home sales and private sector credit figures from the RBA. Looking abroad in Asian trade, there’s China PMI data at midday AEST and the Bank of Japan will make its interest rate announcement (no change expected). Then tonight the Eurozone has preliminary GDP and inflation data for October, along with the September unemployment rate.
Have a great day.