Market wrap: US rates boosted by durable goods - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: US interest rates were boosted by strong durable goods orders data, but the US dollar was content to range sideways ahead of tonight’s important speech from Fed Chair Yellen. The S&P500 is down 0.1%, oil up over 1%.

Interest rates: US 10yr treasury yields rose after the durable goods data, from 1.55% to 1.58%, while the 2yr rose from 0.75% to 0.79%. Market pricing of the Fed funds rate firmed, implying around a 30% chance of a rate hike in September, a 70% chance by December, and 100% by May 2017. A 7yr auction saw muted demand, awarded at 1bp above market yield. Fed comments came from Kaplan, who said the jobs trend continuation would warrant a hike, and George, who said it’s time to move (gradually). A former governor – Warsh – was highly critical of Fed behaviour.

Currencies:  The US dollar index recovered from an early London dip to be roughly unchanged on the day. EUR rose from 1.1260 to 1.1285 via 1.1298, unfazed by the weaker IFO report. USD/JPY repeatedly tested the 100.60 area but remained contained. AUD ranged between 0.7602 and 0.7639. NZD slipped from 0.7325 to 0.7287. AUD/NZD held above yesterday’s 1.0396 low, trading up to 1.0434."