Markets reassess the chances of a Fed hike in 2016 - Westpac

Imre Speizer, analyst at Westpac noted that a surprisingly weak US labour report hurt the US dollar and pushed interest rates lower.

Key Quotes:

"Markets reassessed the chances of a Fed hike this year.

Global market sentiment: A surprisingly weak US labour report hurt the US dollar and pushed interest rates lower. Markets reassessed the chances of a Fed hike this year.

Interest rates: The US 10yr treasury yield plunged from 1.80% to 1.70% - a two-month low - in response to the disappointing US labour data. The 2yr fell even further - from 0.90% to 0.76% - steepening the curve. Market pricing for near-term Fed hikes saw sharp revisions: June is now given no plausible chance (4%, compared to 20% the previous day), while July is around 30% (from 60%).

FOMC dove Brainard’s comments helped extend the post-payroll reactions, arguing that prudent risk management would suggest holding off on rate hikes until the data confirms an economic rebound and Brexit risks have passed."