Despite the elevated level of US risk-free rates, the US indices appear quite resilient. Instead, investors are concerned about China. While its policy rates and risk-free rates are easing, China’s residential property sector is under stress and casts a shadow over Asian markets.
The Straits Times Index ended August and the week of August 28-31 at 3,233, just below the confluence of the 50- and 100-day moving averages at 3,235 and 3,238 respectively. Since smoothed RSI is rising and at its equilibrium line suggesting that the STI could continue to rally. To do so, it would have to be able to rise above the confluence of the moving averages. Directional movement indicators are also at neutral levels, with both ADX and the DIs at neutral readings.
The US risk-free rates abated, with yields of 10-year US treasuries easing from 4.25% a week ago to 4.09%. Directional movement indicators of the 10-year yields have turned down from overbought levels and look set to move towards neutral levels. Against this background, the 10-year yields may move towards 4.05%.
