Closing Bell 13th October: China’s Sluggish CPI Raise Economic Concerns

Hot US Inflation Impacts Australian Dollar
The Australian dollar experienced a significant drop after US inflation data surpassed expectations, leading to speculation that both the Federal Reserve and the Reserve Bank might continue to raise interest rates. The local currency saw its most significant daily decline since early August, nearing an 11-month low. Concurrently, bond yields surged, with US 10-year rates nearing a 16-year peak.

China’s Consumer Prices Remain Steady
In September, China’s consumer inflation rate remained unchanged, while producer prices continued their decline. This has raised concerns about the need for additional support to maintain economic growth. The stagnation in consumer prices is attributed to a high comparison base from the previous year and an abundant food supply. China’s economy faces challenges from a property crisis and reduced consumer confidence, affecting various sectors.

Australia Introduces New 31-year Bond
The Australian Office of Financial Management announced the sale of a new 31-year bond, extending its debt maturity profile. This bond, set to mature in June 2054, will be the AOFM’s longest-dated security. The AOFM’s current longest-dated bond is the 2051, trading at 4.9%.