Analysts at Westpac offered their market wrap.
Key Quotes:
"Global market sentiment: Markets adopted a risk-averse posture after inflammatory comments from North Korea. The US dollar rose, and bond yields and equities fell.
Interest rates: US 10yr yields fell from 2.26% to 2.21%, 2yr yields from 1.44% to 1.42%. Fed fund futures yields continued to price the chance of a December rate hike at 71%. Fedspeak was mixed.
Currencies: The US dollar index rose 0.5% to a three-week high. Underperformer EUR fell from 1.1935 to 1.1832 – a three-week low, partly due to the German election result. There were also comments from Draghi suggesting no hurry to remove accommodation. The safe-haven yen (and Swiss franc) outperformed, USD/JPY falling from 112.30 to 111.48. AUD slipped from 0.7970 to 0.7926. NZD consolidated between 0.7260 and 0.7295. AUD/NZD consolidated between 1.0900 and 1.0940.
Economic Wrap
Chicago Fed national activity fell from +0.03 to -0.31 (vs -0.25 expected). Dallas Fed manufacturing activity rose from 17.0 to 21.3 (vs 11.5 expected).
There were Fed speeches from Dudley, who thought that weakness in inflation was starting to pass and that tightening should continue; and Evans, who wasn’t convinced that the weakness in inflation was transitory."
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