Market wrap: risk rally on lower Fed probabilities - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: Markets partly retraced Friday’s “mini-taper tantrum”. The US dollar and interest rates are slightly lower, while risk appetite improved (S&P500 +1.5%). The Fed’s Brainard was more dovish than expected.

Interest rates: US 10yr treasury yields initially extended Friday’s rise, to 1.70% (three-month high), before slipping back to 1.66% post-Brainard. The 2yr yield reversed from 0.81% to 0.77%. Market pricing of the Fed funds rate fell, implying around a 20% chance of a rate hike in September, a 70% chance by December, and 100% by May 2017.

Currencies:  The US dollar index is slightly lower. EUR ranged sideways between 1.1211 and 1.1268. USD/JPY fell from 102.40 to 101.57. AUD found a two-week bottom at 0.7494 around midday London, rising to 0.7567 post-Brainard. NZD similarly bounced off 0.7291 to 0.7357. AUD/NZD ranged sideways between 1.0275 and 1.0305."