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Market wrap: US interest rates, the US dollar, and equities rose - Westpac

Analysts at Westpac offered their market wrap.

Key Quotes:

"Global market sentiment: US interest rates, the US dollar, and equities rose after Trump’s proposed tax reforms were unveiled.

Interest rates: US 10yr yields rose from 2.24% to 2.31% - a two-month high, 2yr yields from 1.45% to 1.48 – a nine-year high. Fed fund futures yields continued to price the chance of a December rate hike at 76%.

Currencies: The US dollar index rose 0.5% to a one-month high. EUR fell from 1.1790 to 1.1717 – a one-month low. USD/JPY rose from 112.30 to 113.26 – a two-month high. AUD fell from 0.7880 to 0.7836 – a one-month low. NZD outperformed, consolidating between 0.7180 and 0.7240. AUD/NZD fell from 1.0940 to 1.0868.

Economic Wrap

US durable goods orders rose 1.7% in August (vs 1.0% expected). A solid outturn, with the core measure - capital goods ex-defence and aircraft - up 0.9% (0.3% est)... We should see some modest upward revisions to Q3 GDP growth with business investment looking stronger in the middle of the quarter. The caution is that this data is notoriously volatile and subject to large revisions month to month. Pending home sales fell 2.6% (vs -0.5% expected). The NAR said:  "summer's terribly low supply levels have officially drained all of the housing market's momentum."

Fedspeak involved Brainard, who spoke about labour markets rather than monetary policy, but said the Fed is “treading water in terms of numbers”; and Bullard said there’s no need to raise rates with inflation still lagging, adding that he’s the most dovish member of the FOMC."

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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