To the scoreboard:
Dow: 24,515.40 +129.37 (+0.53%)
S&P 500: 2,664.42 +4.43 (+0.17%)
AUD/USD: 0.7560 +0.0033 (+0.44%)
ASX200 SPI futures (December contracts): 6,028 (+10)
1. Inflation, is that you?: The US dollar rose to a one-month high after November producer price inflation (PPI) beat forecasts, in an indication that price pressures may be starting to build in the US economy. There was also steady demand for the AUD in the wake of Frank Lowy’s landmark sale of Westfield.
2. Bond yields up: The PPI reading drove benchmark US 10-year yields back over 2.4% ahead of a big night of US data. Monthly CPI inflation figures will be followed by the US Fed’s December interest rate announcement. Markets have fully priced in a 0.25% rate increase, and when it comes to the central bank’s 2018 outlook, the chief of Blackrock’s $US1.7 trillion bond fund says don’t fear the Fed.
3. Crypto bulls are on the charge: US exchange Coinbase had to halt trade in Ether and Litecoin overnight amid a rapid surge in value. Ether’s gains followed a project announcement by major global banks using the Ethereum blockchain, while Litecoin’s founder issued a warning with the cryptocurrency up more than 100% this week. Bitcoin was comparatively less volatile — it rose to another record high.
4. ASX200 set to open higher: Futures traders are betting on another rise this morning after the local index edged higher yesterday. US stocks continued to climb on low volumes ahead of key data tonight, and Bank of America thinks the bull market has plenty further to run. The positive lead from global stocks helped to offset a rough session on Chinese markets yesterday.
5. Iron ore bounces back: Spot prices for benchmark 62% fines climbed back above $US70 a tonne despite negative price action in futures markets. And after a strong session for Australian energy stocks yesterday, benchmark crude oil briefly hit a two-year high overnight then promptly slumped by more than 2%.
6. Chinese dilemma for the US Fed: Bloomberg reports that analysts from Wells Fargo think the US Fed could be placed in a tough spot next year, with bond yields rising as China reduces its US bond purchases. The timing of that reduction may arrive right when the US could do with some extra cash, as the Fed tapers its balance sheet while the proposed tax cut plan could add up to $US1 trillion to the federal deficit.
Have a great day.