ASX Set to Open Higher as US Treasury Yields Decline and Trump Mulls Economic Emergency

The Australian share market is anticipated to open higher on Friday. This optimism comes after the US S&P 500 and Dow Jones indices saw gains earlier in the week. The US markets had a brief pause for trading on Thursday to honor the late former president Jimmy Carter.

Market Overview

The ASX 200 futures are showing a positive movement, with a 0.4% increase reaching 8,339 points. The Australian dollar saw a slight decrease, falling 0.3% to trade at 61.97 US cents. Meanwhile, the S&P 500 rose by 0.2% to 5,918 points, and the Dow Jones gained 0.3% to 42,635 points. On the other hand, the Nasdaq Composite slipped by 0.1% to 19,479 points.

US Treasury Yields Trending Down

US Treasury yields have eased, with the 10-year yields recently hitting an eight-month high. This decline in yields is significant as investors assess how president-elect Donald Trump's proposed economic policies might shape future economic conditions. Proposals such as tax cuts and reduced business regulations may lead to economic growth, but tariffs on imports and stricter immigration laws could potentially increase consumer prices.

Trump's Consideration of Economic Emergency

President-elect Donald Trump has revealed he is contemplating the declaration of a national economic emergency. This move seeks to provide a legal framework for implementing tariffs of 10% on global imports and 60% on goods imported from China. By invoking the International Economic Emergency Powers Act (IEEPA), Trump can create a new tariff strategy that could impact both allies and adversaries.

Investor Reaction and Federal Reserve Outlook

Investors are keenly observing how these developments will influence the upcoming US monthly payrolls report. Insights from this report will guide expectations regarding the Federal Reserve's policy decisions. Recent minutes from the Fed’s latest policy meeting indicated concerns that Trump's proposed tariffs and immigration policies could complicate efforts to tackle inflation.

In the meantime, cryptocurrency Bitcoin has seen a decline, dropping by 2.5% to $92,138.

Disclaimer: This article is not intended as investment advice.

ASX, Trump, Yields