Long Treasury yields are back up - the US is looking at what else it can do to get borrowing costs down. Australia’s labour market softens, taking pressure off the RBA. And Japan’s exports surge on AI demand.
In our deep-dive interview, ANZ Economist Vicky Xiao Zhou looks at what’s driving Asia’s AI tech export boom.
5 things to know in 5 minutes:
Longer-dated US Treasury yields rose overnight, reversing falls yesterday after the US Treasury announced the doubling of a buyback programme. The US Treasury Secretary Scott Bessent announced he was looking at additional measures to bring borrowing costs down. ANZ Head of FX Research Mahjabeen Zaman says the underlying issues driving US borrowing costs need to be addressed.
Australia’s unemployment rate edged up to 4.5% in July - in line with ANZ Research’s pick. Employment unexpectedly fell by nearly 16,000, although June’s jobs growth was revised up at the same time. ANZ Senior Rates Strategist Jack Chambers says there are signs of weakness showing through.
Jack says the labour market is not a source of upside inflation risk for the RBA at the moment.
China left key 1- and 5-year bank lending rates - or loan prime rates - on hold yesterday. The decision comes as markets look for how authorities will respond to weak July activity data, says ANZ Economist Vicky Xiao Zhou.
Japan’s exports grew 23.2% in the year to July - the fastest since 2022 and boosted partly by booming AI tech demand. But imports grew faster - by 27.8%, meaning the trade deficit widened, notes Mahjabeen.
Cheers,
Alex, standing in for Bernard.
PS: Catch you next week as we keep an eye on those long US Treasuries.
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