Sentiment elevated, commodities and stocks up - Westpac

Analysts at Westpac offered a market wrap of overnight business.

Key Quotes:

"Global market sentiment: Sentiment remained elevated, benefitting equities and commodities. The S&P500 is up 0.4% (and only 0.7% below the record high), Brent crude +2.0% (to $53 – an eight-month high). That sentiment, plus speculation that Fed’s rate hikes will have been delayed further by the weak jobs data, pushed the US dollar lower.

Interest rates: The US 10yr treasury yield fell slightly, from 1.72% to 1.70%, the latter level looking increasing vulnerable to a downside break (it’s been tested nine times in the past four days). Demand for 10yr treasuries was illustrated by last night’s auction which resulted in a record 74% allocation to indirect bids (a loose proxy for offshore demand). The 2yr ranged sideways between 0.77% and 0.79%. Market pricing for near-term Fed hikes receded slightly further: June remains a zero chance, while September is around 40%.

Currencies:  The US dollar index (DXY) fell by around 0.4% to a one-month low. EUR rose from 1.1365 to 1.1411 – a six-week high. USD/JPY fell from 107.20 to 106.60. AUD extended a two-week old rally, from 0.7435 to 0.7482 – a one-month high. NZD similarly rose from 0.6980 to 0.7028 – a one-month high. AUD/NZD slipped from 1.0660 to 1.0633."