Market wrap: politics weighs on dollar and US yields - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: The US dollar, bond yields, and equities all fell slightly. Possible explanations include reports Trump’s tax cuts may be phased in over several years, FBI charges against former campaign staff, and likely announcement of the Fed Chair on Thursday.

Interest rates: US 10yr treasury yields fell from 2.41% to 2.37%, 2yr yields from 1.60% to 1.57%. Fed fund futures yields remained elevated, pricing the chance of a December rate hike at 96%.

Currencies: The US dollar index is down 0.3% on the day. EUR rose from 1.1600 to 1.1646. USD/JPY fell from 113.80 to 113.03. AUD ranged sideways between 0.7656 and 0.7688. NZD bounced off 0.6833 to 0.6876. AUD/NZD slipped from 1.1230 to 1.1166, possibly affected by iron ore’s decline (-2.2% yesterday, to a four-month low).

Economic Wrap

US personal income rose 0.4% in Sep (as expected), and personal spending rose 1.0% (vs 0.9% expected). The increase in spending is partly hurricane-related, and caused the savings rate to drop to 3.1% - a cycle low. The core PCE deflator rose 0.1% (as expected), maintaining the annual pace at a subdued 1.3%."