Asia equities are trading with moderate gains after the rebound across global counterparts continued, including a revival of the cyclical outperformance after a correction in the Reopening/Reflation Trade early this week. The commodity complex also advanced as the USD and US Treasuries sold off. The US 10 Year Treasury yield now sits around 1.30%, backtracking almost the entire rally from Monday, while WTI has reclaimed the USD 70 level.
On the pandemic front, Australian Treasurer Frydenberg said he hopes Australia will avoid a recession as lockdowns are costing around AUD 300mln per day and sees the next GDP figure negative. This week’s risk-off price action was also weighing the risk of a slow reopening in the months ahead due to worries that new quarantine and lockdowns measures were hitting the wires and trading desks around the world. Another theme that investors will continue watching is China’s local governments are now reportedly rushing to launch rescue funds valued at billions of dollars to bailout state-owned enterprises of China following a period of bond defaults.
