November 21, 2023

Markets Today – Feel Good Time

US equities start the new week in a positive mood, the USD has remained under pressure and after initially edging higher, longer dated UST yields edge lower supported by a well-received 20y Bond auction.

Todays podcast


  • Risk positive start to the new week
  • US equities extend recent gains, S&P 0.83%, NASDAQ 1.27%
  • UST curve twist flattens. 10y Note -2bps to 4.41%
  • 20y UST bond action draws favourable demand
  • USD remains under pressure, down 0.4%
  • NZD back above 0.60, AUD at 0.6563
  • Oil prices up again (WTI/Brent ~3%). And so too iron ore
  • Coming Up Today:  NZ Trade, RBA Minutes, RBA Bullock

Events Round-Up

Nothing to note.


Feel good, real good, it’s the same old saying, yeah, yeah – Pink


US equities start the new week in a positive mood, and after initially edging higher, longer dated UST yields edge lower supported by a well-received 20y Bond auction. The USD has remained under pressure, softer across the board with NZD and AUD consolidating gains seen during our APAC session yesterday. Oil prices are up again and so too iron ore.

US equities have started the new week with a spring in their step with the S&P 500 edging towards its highest level since August . As I type the index is +0.83% with the IT sector leading the gains, up 1.38% while Utilities is the only sector in the red, down 0.31%. Meanwhile the tech-heavy Nasdaq 100 was on pace for a 22-month high, up 1.2%. In company news Microsoft rallied to a record while Nvidia climbed in the run-up to its earnings. Earlier in Europe, the Eurostoxx 600 closed 0.10% and yesterday the Nikkei reached a 33-year intra-day high before closing down 0.6%. Japanese stocks have advanced almost 30% this year, underpinned by strong company results, a weak Yen and progress on corporate governance.

Longer dated UST yields initially traded higher, but a well-received 20y bond auction triggered a reversed in course with longer dated yields ending the day down around 2bps . The 10y Note eased 2bps to 4.42% while the 30y Bond declined 2.5% to 4.56%. After soft demand recorded in the previous 30y Bond auction, the solid result for the 20y Bond auction alleviated concerns over a lack of appetite for debt during a holiday-shortened week (the auction drew yields of 4.78%, compared with the pre-sale level of 4.79%). Earlier in the session, European bond yields moved higher with yields on 10-year bunds up 3bps to 2.62%. Italian bonds outperformed following Moody’s decision to revise its outlook to stable from negative. The spread between 10-year Italian BTPs and German bunds has tightened from 208bps to 173bps since mid-October amid improved risk sentiment.

Sticking with Europe, Bloomberg notes that Germany is exploring a drastic overhaul of its federal budget for this year , including relaxing restrictions on net new debt, following last week’s ruling by the country’s top court.  Governing Council member Wunsch said in a Bloomberg interview that the ECB may have to raise borrowing costs again if the markets pricing for easier policy undermines the bank’s policy stance. Wunch, a known hawk, expressed concern that the current easing in financial conditions might make policy too easy. This as markets have removed any last vestiges of hikes in the last couple weeks to price cuts through 2024.

The USD extended its recent decline, falling for the sixth day in the past seven. Both the DXY and BBDXY are down 0.4% over the past 24 hours with much of the decline recorded during our APAC session yesterday. CNY/CNH started the new week in a positive mood supported by a stronger than expected PBoC fix. Yesterday USD/CNH fell from 7.22 to 7.1648 with the pair closing at its lows. Overnight, Bloomberg reported Chinese regulators are drafting a list of 50 developers eligible for a range of financing. The list, which includes both private and state-owned developers, is intended to guide financial institutions as they weigh support for the industry via bank loans, debt and equity financing. After dismal property figures in October showing decline in prices and sales, Beijing has been on a new drive to support the sector with some positive signs seen in the performance of some property shares, as well as iron ore (up another 2.9% to $132.2). The currency (CNH and CNY) is now showing some impetus too with USD/CNH break below 7.20, suggesting the pair now has room to head towards 7.11 over coming days.

Other Asian currencies also made inroads against the USD with JPY a top G10 performer over the past 24 hours . JPY is up 0.8% with USD/JPY starting the new day at ¥148.31, the currency usually shows a great deal of sensitivity to movements in 10y UST yields, but recent dovish comments from the BoJ have hindered its ability to perform, notwithstanding a backdrop of lower UST yields. The 10y US-JN sovereign spread suggests USD/JPY should trade closer to ¥147 rather than ¥150, but now it seems the currency is taking notice.

Yesterday’s CNH appreciation and consolidation during the overnight session boosted both the AUD and NZD . Yesterday, as CNH was heading towards 7.16, the AUD made a swift move from around 0.6512 to above 0.6550 and then overnight edged a little bit higher again to start the new day at  0.6563. Positive risk sentiment, higher energy and iron ore prices and a broadly weaker USD are all favourable tailwinds for the AUD. NZD starts the new day above 0.60, yesterday’s NZD move higher lost momentum ahead of technical resistance in the 0.6055/60 region which has corresponded with the highs on several occasions over the past 8 weeks. A break above this level would confirm an evolving higher trading range.

Lastly and as noted above, oil prices have continued to rally. Brent crude prices increased 2.8% and are now back above $82 per barrel. Opec+ is expected to consider extending production cuts when they meet in Vienna on Sunday . In addition to iron ore, copper and aluminium also had a Monday, up 1.9% and 1.8% respectively.

Coming Up

  • New Zealand publishes trade figures for October and our BNZ colleagues see the
  • annual rate of fall in exports moderating to 7% (from -18% in September) with imports seen at -14%.
  • This morning, RBA Governor Bullock participates on a panel at the ASIC Annual Forum (10:00 AEDT), the Q&A section may offer an opportunity for the Governor to expand on the RBA’s mild hiking bias.
  • The RBA November Minutes are also released this morning (11:30 AEDT), but our economists think they are unlikely to add much given the recent SoMP, where the overview discussed the
  • consideration at the November meeting.
  • Tonight, the US gets October existing home sales stats and Canada releases CPI figures also for October. Both headline (3.1% exp from 3.8%yoy) and core readings are expected to ease (trim and median expected to decline 1 to 2 tenth to 3.6%yoy).
  • ECB’s Lagarde, Schnabel and Centeno speak, and BoE’s Bailey testifies to UK Parliament
  • Early tomorrow morning (6:00am AEDT) the Fed publishes FOMC Minutes for the November 1 meeting. We think the FOMC Minutes are unlikely to be market moving given recent soft core inflation print.

Market Prices

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