Daily Market Color

Volatile Day Ends with Rates Mixed Ahead of Fed Speakers, Jobs Data  

Australia hikes rates less than expected, but swap rates and yields end day off lows. Treasurys opened the day boosted by the Reserve Bank of Australia’s unexpected decision to hike rates by only 25 bps, which saw the 2-year yield fall as low as 3.99%. The 2-year yield then rose throughout the remainder of the day, ending at 4.09%. The long-end of the curve also traded in a wide range, the 10-year yield falling as low as 3.56% before ending the day at 3.63%.

OPEC+ to announce oil output cuts tomorrow, but actual production may not change significantly. Tomorrow, OPEC+ is expected to announce oil production cuts. Since OPEC+ nations produce ~40% of the world’s crude oil, the group’s production targets are closely monitored. Too much production tightening may increase prices, but could potentially slow demand. On the other hand, slowing production too little may keep oil prices low and hurt export revenues for OPEC+ countries. Energy prices have a substantial impact on cost of production, and conversely inflation.

Day ahead. Tomorrow will see numerous data reports released, including ADP employment change for the month of September, U.S. balance of trade in August, and non-manufacturing PMI in September. Raphael Bostic will make public comments at 4:00 PM ET.

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