6 things Australian traders will be talking about this morning

The US Fed took a hawkish lean at its interest rate announcement. (Photo by Ozkan Bilgin / Anadolu Agency / Getty Images)

Good morning.

To the scoreboard:

  • Dow: 25,201.20 -119.53 (-0.47%)
  • S&P 500: 2,775.63 -11.22 (-0.40%)
  • AUD/USD: 0.7579 -0.0001 (-0.01%)
  • ASX200 SPI futures (June contracts): 6,022 (-5)

1. Hawkish Fed: The US Fed raised interest rates by 25 basis points as expected, and signaled another two rate increases are on the cards for this year. CME’s Fedwatch tool now has the probability of a fourth 2018 rate hike in December at 51.7%. Here’s the new Fed dot plot.

2. US 10-year bond yields edged higher to 2.98%, outpaced by 2-year debt as the US 2-10 yield spread briefly fell below 40 basis points to the lowest level in more than a decade. Here’s why a negative yield spread — which historically has signaled a recession — may not be such a reliable indicator this time around.

3. The US dollar rose in the wake of the announcement, but most of the major pairs clawed back losses and despite a hawkish lean from the Fed, the US dollar index ended up falling by around 0.3%. Along with today’s jobs data in Australia, the next major event for currencies is tonight’s ECB meeting.

4. It’s jobs day: The ABS will release employment figures for May at 11:30am AEST. The median forecast is for 19,000 jobs to be added, with increased participation keeping the unemployment rate at 5.6%. There’s also quarterly data on underemployment — a key indicator for wage growth. David Scutt’s 10-second guide is here.

5. A more bullish stance from the Fed weighed on US stocks, as the S&P500 fell by 0.4% — once again outpaced by the NASDAQ which briefly hit a record high before closing flat. Tech stocks in Europe also performed well, along with Italian banks as debt auctions for Italian government bonds saw solid demand.

6. Meanwhile, the bidding war in global media is heating up as Comcast lodged a $US65 billion cash bid for 21st Century Fox overnight, topping Disney’s $US52 billion. That follows yesterday’s court approval for AT&T’s $US85.5 billion merger with Time Warner.

Bonus item: Bitcoin continued its slide towards $US6,000 overnight, amid reports that last year’s bull run was driven in part by market manipulation.

Today’s data calendar:

  • Chinese retail sales, industrial production and urban investment.
  • European Central Bank monetary policy meeting.
  • German inflation data.
  • US and UK retail sales.

Have a great day.

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