US yields on a runner
One could expect a bit of apprehension to enter the fray, and not just from a relief rally hangover, but local bond and currency traders could start looking over their shoulders at US 10y bond yields that have raced higher to 3.05 %.
While everyone thought US bond yields could begin to rise in September as the markets emerged from summer holiday, but few could have predicted yields to come on as strong as the did with US 10Y touching to 3.05 %
While last NFP data produced strong wage growth data I think its as much a function of hawkish fed speak as anything else Where the most significant shift in my view comes from Fed Governor Lael Brainard, who I dare say it starting to roost with the Hawk suggesting the sitting Federal Reserve Board is a tad more hawkish than markets have priced in.
While last week lower than expected US CPI, print does suggest we are nowhere near a reprice higher of the Fed curve from an inflationary standpoint
But with the market emerging from its summer slumber and the US economy rocking on overdrive, traders may soon realise that they are pricing 2019 rate hike risk far too pessimistically. If the strong run of US economic data continues and an even more so on the first glint of inflation.
The pragmatist in me says this is USD supportive and not an especially appealing prospect for local Asia markets, in my view
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