Market wrap: Trump effect stalling - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: US interest rates and the US dollar stalled overnight, consolidating a spectacular 6% rise in the latter since the US election. Equities fared well, the S&P500 up 0.7% to a fresh record high, and oil rose over 4%.

Interest rates: US 10yr treasury yields ranged sideways between 2.30% and 2.35%, consolidating a 63bp rise since the US election (a total of 103bp since July’s record low). The 2yr yield continued to rise, though, from 1.04% to 1.09% - an 11-month high. A 2yr auction was lacklustre, awarded at 0.5bp above market. Fed funds futures firmed slightly to now imply a 100% chance of a rate hike in December.

Fedspeak from VC Fischer echoed Yellen’s comments earlier this week, that the economy was in the vicinity of its employment and inflation goals, suggesting the economy could be allowed to heat up for a while and inflation overshoot.

Currencies:  The US dollar index stalled around a 14-year high. EUR rose from 1.0590 to 1.0650, but completely retraced during the NY session. ECB President Draghi said monetary policy will need to remain accommodative to meet it inflation goal, suggesting its QE program will be extended beyond March 2017 but at a slower pace. USD/JPY rose from 100.60 to 111.36 – a six-month high. AUD bounced off a five-month low of 0.7311 to 0.7382. NZD similarly bounced off a four-month low of 0.6985 to 0.7077. AUD/NZD extended a multi-day decline from 1.0480 to 1.0417."