The latest market news, commentary and strategy by Adrian Rowney
5 Things that Grabbed my Attention
1. Bank of Japan is back digitally printing money like it is going out of fashion.
2. US government plans on issuing a whopping $1.85 Trillion worth of bonds over the next 6 months....This massive deficit spending is definitely propping up the US economy, but at this rate it can't be sustainable - who are the suckers that are going to buy all this debt considering the two biggest investors, being China and Japan are selling?
3. New car sales in Australia are up 14% from a year ago - 96,859 were sold in July.....At the same time, prices for second hand cars appear to be tanking.
4. Property Council of Australia has said the national CBD office vacancy rate has hit a 30 year high of 12.8%....AVOID exposure to the sector.
5. The Brazilian central bank cut interest rates by 0.5%....don't get too excited for all our Brazo mates, rates are 13.25%.
ASX Market Update
ASX 200 down 42 points to 7311
All sectors of our market traded lower as concerns over the downgrade of the US government's credit rating grew.
Now that yields are pushing to around the highest levels not seen since the GFC, you are going to find that financial advisors, banks and the business media will really start talking up prospects of investing in bonds. Sure we could see a relief rally, but the risks are way too high with the second wave of inflation lurking on the horizon. As we have seen over the past few years, inflation smashes bond investors....Careful out there.
The Day Ahead
- Our SPI is down 5 points
- Bitcoin up 0.4% to $29,255
Movements affecting our resource stocks today (USD)
- BHP in the US up 0.25%
- Newmont down 0.54%
- Gold down 0.31% to $1968
- Paper Silver down 0.83% to $23.67
- Platinum down 1.18% to $919
- Copper up 1.35% to $3.89
- Brent Crude up 2.5% to $85.28
- Iron ore down 2.5% to $101.35
Asian Market Update
Japan down 1.68%, China up 0.58%, Hong Kong down 0.59%
Where does the Bank of Japan (BOJ) get the money to buy bonds?....Well they digitally print it by pressing enter on a keyboard - that is it!!....One of these days the Japanese financial system is going to break, sending world markets into an absolute tailspin.
BREAKING: BOJ conducts emergency bond buys as yields hit fresh 9-year peak.https://t.co/s5ToOynmfK
— Nikkei Asia (@NikkeiAsia) August 3, 2023
Global Market Update
DOW down 66 points to 35,215
US government bonds sold off again as the yield on the 10 year bonds pushed up to 4.18%....When a bond falls in price the yield goes up - it is an inverse relationship.
Looks like a technical breakout on the chart to me.
Brits down 0.43%, Germans fell 0.79% and Frenchies dipped 0.72%
The Bank of England (BOE) increased rates by 0.25% to 5.25%...They are certainly bringing the PAIN now, but remember their message to the people?
Key Market Summary