6 things Australian traders will be talking about this morning

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Good morning.

To the scoreboard:

Dow: 24,190.90 +330.44 (+1.38%)
S&P 500: 2,619.55 +38.55 (+1.49%)
AUD/USD: 0.7815 +0.0034 (+0.44%)
ASX200 SPI futures (March 2018 contracts): 5,724 (-28)

1. US stocks capped a wild week of trade with a 1.5% gain on Friday night, as the S&P500 rebounded off its 200-day moving average and US Congress passed a bill to extend government funding. But ASX futures are pointing lower and Chinese markets will also be in focus after the Shanghai SE50 crashed by 4.6% on Friday.

2. The week ahead: Key data in Australia will be led by January employment figures on Thursday, while ASX company reporting season is about to get into full swing. And all eyes will be on US inflation figures on Wednesday night (12:30am AEDT), after the upside surprise in US wage growth on February 2 — a key leading indicator of inflation — sparked jitters in bond markets. Full details are here in the weekly diary.

3. Speaking of bonds, benchmark US 10-year bond yields finished the week at 2.857% — just off the recent four-year high of 2.88%– with the inflation-adjusted yield on US 10-years also at a multi-year high of 0.78%. The yield spread between Australian and US 10-year bonds will start the week in negative territory, after Aussie 10-years closed at 2.843% on Friday night.

4. The Aussie dollar found some buyers to end the week — climbing from a six-week low — helped by risk-on appetite in global markets as US stocks steadied the ship. The UK pound was the worst performer amid more uncertainty about Brexit negotiations, while the US dollar index traded flat as the AUD, euro and yen all found support at key technical levels on Friday night.

5. Oil continued its slide on Friday, with prices for both brent crude and US WTI barrels falling by more than 3%. Brent crude has now dipped by more than 10% from its recent high as US producers respond to higher prices, with Friday’s Baker Hughes rig count showing the largest weekly increase in US oil rigs since April 2013.

6. Low-volatility trades were a key talking point in markets last week, after two volatility-linked investment vehicles lost almost $US3 billion dollars of value in one day. But while Credit Suisse said it would wind up one of the funds, assets in the other one — the ProShares Short VIX Short-Term Futures ETF (SVXY) — more than doubled on Friday, from $US300 million to $US640 million.

Have a great week.

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