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22 Feb 2023

AUD underperformance

• Higher for longer. The Fed meeting minutes reaffirmed a hawkish bias. Elevated US interest rate expectations are supporting the USD.• AUD pressure. Weaker than expected wages data has seen RBA rate hike bets pared back. Relative differentials point to further AUD weakness.• AUD crosses. European growth indicators continue to surprise, pointing to a lower AUD/EUR. AUD/NZD weighed down by a ‘hawkish’ RBNZ. A mixed night across the major markets, with European and US equities consolidating and bond yields down a few basis points. After hitting a fresh 3-month high the US 10-year bond yield has eased back slightly, but...

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Fire. Aim. Ready.

Investors are in a “sell first, ask questions later” kind of mood. Bond and equity markets suffered their worst day of the year yesterday amid speculation we have arrived at a “good as it gets” moment for the US economy, and risk aversion remains well entrenched – the dollar and yen are outperforming their rivals on safe-haven demand, commodity prices are down, and yields are up sharply. Consumer bellwethers Home Depot and Walmart issued disappointing outlooks, suggesting that prices could continue to increase even as sales volumes fall through the remainder of the year. Home Depot projected flat revenues for...

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