Analysts at Westpac offered a market wrap.
"Global market sentiment: Most markets were stuck in consolidation mode. US data was mixed, Fed dissenter Kashkari explained, and the G20 watered down its free trade commitment.
Interest rates: US 10yr treasury yields fell from 2.54% to 2.49% - just above the low of the previous two days’ range, while 2yr yields fell from 1.34% to 1.30%. Fed fund futures continued to price around a 60% chance of the next hike occurring in June.
Currencies: The US dollar index is little changed after ranging sideways around a one-month low. Underperformer EUR fell from 1.0780 to 1.0730 following a gain in polls by French populist Le Pen. USD/JPY fell from 113.40 to 112.57, the yen outperforming on the day. AUD rose from 0.7666 to 0.7718. NZD rose from 0.6980 to 0.7040. AUD/NZD ranged between 1.0955 and 1.1000."
"US consumer sentiment (Mich. Univ.) firmed from 96.3 to 97.6 (97.0 expected). However it was the inflation expectations reading (for 5-10yr) which attracted most market attention, showing a decline from 2.5% to 2.2% - an all-time low. The Labour Market Conditions Index was unchanged at 1.3 in Feb (vs 2.5 expected).
FOMC dovish dissenter Kashkari noted that the Fed still remains below its inflation target, while labor slack remains and the Fed shouldn't treat the 2% inflation target a ceiling. In addition, he thought the Fed should first publish a plan on trimming the balance sheet, which could trigger tighter financial conditions, resuming hikes only once it sees the market reaction to the plan.
The G20 meeting in Baden Baden, German ended on Saturday with the US getting their way on the issues involving free trade and climate change. US Treasury Secretary Mnuchin said he could not be happier with the deal while his French counterpart Sapin expressed regret at the outcome on trade and climate change. The G20 broke a decade long tradition of endorsing open trade and instead only made a token reference to trade in Saturday’s communiqué. According to Reuters – some said that at times it was 19 against one regarding the free trade pledge, but the US would not yield on key issues, essentially torpedoing earlier agreements as the G20 requires a consensus."
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