Commodity prices increase, post Trump spending anticipation

Now time out for a breather?

It looks as though commodities have crashed the party. Crude now trading at a 17 month high post comments from Saudi Arabia. Oil was up 2% to trade $52.43 after briefly touching $53. Crude is trading in response to the anticipated big spending by Trump driving demand and the Saudis commenting that they are committed to ease production greater than first agreed. On the back of a stronger oil price, equities were a little subdued. The Dow was up slightly 0.2% to close on the day to yet another record. The S&P 500 was down slightly.

Bonds had yet another Bad day. The UST 10 year traded to a high of 2.50% before drifting lower. The German yield curve steepened to the steepest since 2014.  The curve between 2/10years is about 1.20%. The 10 year bund closed about 0.40%. The Japanese curve continued its trend over the last 4 days of steepening.

With the imminent tightening by the Fed it will be interesting to see how the markets react going into the final week before Christmas and year end squaring.

UK Gilts rose 4 bp to 1.49%.

Aussie Market Today.

More of the same on the day. That is equities a little stronger and bonds should sell further. Bonds probably won’t sell too hard on the day as UST Bond s recovered a little on the day as investors wait for the Fed to hike. Equities were mixed but the Dow hit yet another high and I think this sentiment will flow into the Australian market. Watch the Chinese story as yesterday was not a great day there. Bonds equities and currencies all weakened and this is possibly a bad signal for the Australian economic environment.  Expect a day to be slightly mixed.

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