Market wrap: USD extended rally, but equities and bond yields took a breather - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: The US dollar extended its post-US election rally, but equities and bond yields took a breather. The S&P500 is down 0.3%.

Interest rates: US 10yr treasury yields initially rose from 2.20% to 2.30% during the London morning but then retraced completely.

Disappointing US data only partly explained the retracement. The 2yr yield similarly did a round trip from 0.99% to 1.03% and back.

Fed funds futures were steady, implying a 94% chance of a rate hike in December. That market confidence was endorsed by FOMC member Bullard who said it would take a surprise to stop a December rate hike.

Currencies:  

The US dollar index rose to a fresh one-year high. EUR fell from 1.0750 to 1.0666 – the lowest since 3 Dec 2015. USD/JPY rose from 109.00 to 109.76 – a six-month high. Underperformer AUD fell from 0.7560 to 0.7460 – a two-month low. NZD fell from 0.7100 to 0.7036 during the London morning but rebounded to 0.7085 in NY. AUD/NZD fell from 1.0650 to 1.0570."