Markets continue to adjust to near-term growth-friendly US fiscal policy - ANZ

Analysts at ANZ noted that the post-election strength in the USD rolled on as the market continued to adjust to expectations of a more near-term growth-friendly US fiscal policy, which should support higher interest rates.

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"However, the price action in fixed income suggests the market has moved sufficiently for the time being, which raises the possibility that the USD’s rise may be due for a period of consolidation. US 10-year yields initially rose as much as 8bps before retreating to be little changed.

Earlier moves in European bond yields were also fairly muted though it is certainly worth noting that the core and the periphery are diverging (Italy +7bp, Spain +8.5bp, Portugal +18bp). Elsewhere, equities were offered with the Euro Stoxx down 0.8%, FTSE 100 down 0.6%, the DAX down 0.7%, the S&P 500 off 0.4%, and the Dow Jones also down 0.4%. Oil struggled, with WTI ending down 0.4%, just under USD45.55/bbl. Gold spot was little changed at USD1,226 (+0.1%)."