Analysts at Westpac offered their market wrap.
“Global market sentiment: A risk-averse mood permeated US markets overnight. US equities, interest rates, the US dollar, and oil prices all fell.
Interest rates: US 10yr treasury yields fell from 2.41% to 2.37%, while 2yr yields were more resilient, nudging higher from 1.68% to 1.70% – the highest level since Oct 2008. Fed fund futures yields continued to price the chance of a December rate hike at almost 100%.
Currencies: The US dollar index fell sharply, down 0.8% on the day. Outperformer EUR was helped by strong German economic data, rising from 1.1670 to 1.1805 – a three-week high. USD/JPY fell from 113.90 to 113.31. AUD ranged sideways between 0.7613 and 0.7650. Underperformer NZD extended its domestic session decline to 0.6845 before rebounding to 0.6888. AUD/NZD’s domestic session rise extended to 1.1140 before reversing to 1.1076.
German GDP growth rose from an annual pace of 2.3% to 2.8% in Q3 (vs 2.3% expected). In a separate report, economic sentiment (ZEW) rose from 87.0 to 88.8 (vs 88.0 expected). US PPI rose 0.4% in Oct (vs 0.1% expected), for an annual pace of 2.8%. The core measure rose 2.4% annual (vs 2.2% expected). Small business sentiment (NFIB) rose from 103.0 to 103.8 (vs 104.0 expected). FOMC member Bostic thought a gradual rate hike path was appropriate over the next two years.”