The 10-year US Treasury yield fell to 3.679 percent and the 2-year Treasury yield, which normally moves in step with interest rate expectations, slipped to 4.3534 percent.
The modest recovery in stocks and bonds showed optimism about two factors that made 2022 a hell of a year for investors: the steady rise in interest rates to fight inflation and China’s anti-COVID lockdown measures.
But investors in other assets have been nervous. Oil prices fell sharply as concerns about global demand continued amid signs of slowing activity in the main engines of global growth: the United States, Europe and China.
“Fresh warnings about the impact of aggressive rate hikes on the US economy have unsettled traders again as oil prices continue their downward trend,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
US crude fell 4.85 percent to $73.2 a barrel, while Brent was at $78.07, down 4.9 percent on the day.
“The market has started the year quite tentatively…(and) is still struggling to imagine what we’re going to see from the Fed this year,” said Rob Carnell, head of Asia-Pacific research at ING.
“There are two camps out there and they are fighting for supremacy in terms of the prospect. Some days the higher-for-longer camp wins, some days (the) higher-than-lower camp wins,” Carnell said.
Hopes of less aggressive rate hikes buoyed the unyielding gold, with spot prices for the precious metal hitting $1,856.57 an ounce, the highest since mid-June.
The dollar index, which measures the greenback against six other currencies, fell 0.45 percent as commodity currencies like the Australian dollar rallied and the euro rose on positive French and German inflation data.
Sterling was last seen at $1.20575, up 0.75 percent, while the euro is up 0.54 percent to $1.06050 from a three-week low of $1.0519 -dollar that was achieved overnight.
The Japanese yen weakened against the dollar to 132,500 per dollar.
– with a staff reporter
https://www.smh.com.au/business/markets/australian-shares-expected-to-open-high-as-investors-shrug-off-rates-threat-20230105-p5cahc.html?ref=rss&utm_medium=rss&utm_source=rss_business Australian shares expected to open higher