Market wrap: Trump effect stalling - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: The post-US election surge in US bond yields and the US dollar stalled. Risk sentiment remained elevated, the S&P500 up 0.5%.

Interest rates: US 10yr treasury yields consolidated recent gains, ranging between 2.18% and 2.24%.  The 2yr yield did rise slightly further to 1.03% - a 10-month high.  Fed funds futures were steady, implying a 94% chance of a rate hike in December.

FOMC member Rosengren said market expectations of a Dec rate hike seemed plausible. Tarullo expected higher yields to push the US dollar higher, and also noted that the Fed won’t respond to Trump’s programs until they are in place. Fischer said banking regulation may be affecting market liquidity.

Currencies:  The US dollar index is roughly unchanged, although it did nudge up to a one-year high overnight. EUR initially jumped from 1.0750 to 1.0816 before falling back to 1.0720. The safe-haven yen underperformed, USD/JPY rising from 108.00 to 109.06 – a six-month high. AUD slipped from 0.7580 to 0.7512. NZD also slipped, from 0.7130 to 0.7071. AUD/NZD firmed slightly from 1.0600 to 1.0655."