US markets opened higher and equities moved into record territory, once again, only to settle off record highs. The market focus became the rise in interest rates. The US 10 year yields rose to 1.285%, posting strong gains and asking questions. The recent economic considerations of rising interest rates, is that it is a positive, as it shows growth in the economy and demand. The problems arise when the side effects come into consideration. The rising rates will boost inflation/cost of living and inhibit the economic recovery. Unparalleled debt burdens could become dangerously difficult to service?
The rising interest rates were a boost to the floundering US Dollar, with the EUR falling back to 1.2100, while the GBP drifted back to 1.3900. French Unemployment numbers fell back to 8%, while German ZEW Economic Sentiment, showed positive opportunities. Global Dairy prices were higher, boosting the NZD, while the RBA minutes were ‘dovish’. The RBA reiterated that QE infinity would be around for some time to come and was needed to support the weakened economy, while rising commodity prices are supporting the currency. The AUD rally ended, with softer US markets, falling back to 0.7750, while the NZD dropped back to 0.7200.
A plethora of economic data releases will drive intra-day trade, while the virus/vaccine developments are key to the macro-trade.