Market wrap: a heavy tone persists, yen top performer - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global Market Sentiment: Markets continued the heavy tone set in Asia. A void of data in EU and US left markets at the mercy of comments from Trump’s Administration. Ending of current NAFTA and Trade comments, including “very major” border taxes for corporates may not be surprises but triggered further risk position unwinding. JPY moved most in FX and stock market continued to slide. It was notable that Trump’s reference to overall large tax cuts had little market impact.

Currencies: USD/JPY (113.05), followed by GBP/USD (1.2475), led the USD slide. Although AUD was firm, it struggled in front of 0.7600 and so NZD managed to claw back some of the recent AUD/NZD (1.0480) move. Despite some decent moves on the day, overall activity was light with and so risk of short term USD retracements is building.

Interest rates: US 10yr yields (-8bp to 2.38%) continued to be key driver in rates and slid to the mid-point of last week’s range (2.30% -2.50%) as part of general trade unwinds, but spreads to Europe (Bunds slid -5bps to 0.36%) were stickier, in-line with USD’s underperformance."