Market Wrap: Risk aversion took hold - Westpac

Analysts at Westpac offered a market wrap while focus remained with concerns over Central Banks and their policies.

Key Quotes:

"Global market sentiment: Risk aversion took hold amid concern central banks may be approaching an end to their easy monetary policies. The S&P500 plunged 2.5% to a two-month low, oil fell 4%, bond yields rose, and the US dollar outperformed.

Interest rates: US 10yr treasury yields rose from 1.60% to 1.68% (a three-month high), still absorbing the previous day’s ECB disappointment, as well as some hawkish comments from Rosengren (Kaplan and Tarullo were neutral and dovish, respectively). Market pricing of the Fed funds rate rose, implying around a 30% chance of a rate hike in September, a 75% chance by December, and 100% by April 2017.

Other major bond yields also rose, the German 10yr yields moving from -0.05% to +0.02% (two-month high), and Japanese 10yr yields from -0.03% to 0.0%.

Currencies:  The US dollar index outperformed all major currencies. EUR fell from 1.1280 to 1.1199. USD/JPY rose from 102.00 to 103.06, the yen the best of the rest befitting its safe-haven status. AUD fell from 0.7650 to 0.7537. NZD fell from 0.7400 to 0.7315. AUD/NZD fell from 1.0340 to 1.0291."