Daily Commentary BY THE CURVE TEAM –

Cooler Heads Prevail as Data Improves

9th of January, 2020

A volatile 24 hours has finished on a more positive note.

Markets have endured a volatile 24 hours after Iran launched missiles on US targets yesterday. There were fears for the worst with a negative sentiment initially spreading throughout markets. However as the dust settled, cooler heads have prevailed and the door is open for a more positive path forward.

Rather that a knee jerk reaction, Trump waited for reports on the impact of the missiles. After it was revealed that no troops were injured and there was limited damage, he took a more reserved approach, de-escalating the situation. Iran will still face further sanctions but the door remains ajar for further talks to reconcile the situation.

As a result, markets reversed much of the initial negative moves and have finished on a more positive not. Better than expected data likely helped the situation. In the US, the private ADP employment report came in ahead of expectation, pointed to a solid jobs report when the offical nonfarm payrolls report is released on Friday night.

Data in Australia was also better than expected with a large jump in building approvals for November. Total approvals jumped 11.8%, getting a boost from a large spike in multi-density approvals in NSW. The real test for local data will come later today with retail sales data for November is released.

David Flanagan

Director - Interest Rate Markets