Oil prices slip on signs of excess crude supplies
A LACK of major news and nervousness ahead of a key data this week kept financial markets subdued. These include US GDP, a Federal Reserve meeting over Tuesday and Wednesday and jobs data on Friday. The Fed is widely expected to continue tapering its quantitative easing program, by another $10bn but investors will be watching more closely the debate on interest rates. Euro shares may have lost some ground after Germany toughened its stance on sanctions against Russia. The Dow managed to gain 0.1% after a late recovery, while the S&P500 was flat.
US treasuries edged slightly lower overnight. Yields dipped following a weak US housing data release, but then recovered. Yields on 10-year US treasury notes rose 2 basis points to 2.49%.
Yields on Australian 3-year and 10-year bonds both lifted 2 basis points to 2.67% and 3.44% respectively.
The muted session extended to currency markets - the US dollar was little changed against a basket of currencies. GBP edged higher against the US dollar and the euro despite a report by the IMF saying that sterling was overvalued by 5-10%. AUD was also largely unchanged, trading around 94 US cents.
Most commodity prices were little changed ahead of key data this week. The widely-watched CRB measure of commodity prices was unchanged. Oil prices slipped on signs of excess supplies of North Sea and West African crude, despite the ongoing geopolitical tensions in Ukraine and the Middle East.
There was no economic data released locally yesterday.
US pending home sales fell 1.1% in June, following a 6.0% jump in the previous month. Although it is too early to confirm if a downward trend is beginning, the recovery in housing is proving to be uneven.
The Dallas Fed factory index rose from 11.4 to 12.7 in July, its second highest reading since early 2012. This regional index is continuing to point to activity at around trend or slightly above.
The services PMI published by Markit was unchanged at 61.0 in the preliminary reading for July, but a slight decline in manufacturing (released last week) saw the composite PMI slip slightly from 61.0 to 60.9 in July.