Market wrap: USD and US rates consolidate again - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: The US dollar and US interest rates continued to consolidate despite some strong economic data, month-end portfolio rebalancing possibly a factor.  

Interest rates: US 10yr treasury yields did briefly respond to the strong GDP and consumer confidence data, rising from 2.32% to 2.35%, but fell back to 2.31% later in the NY session. The 2yr yield similarly traced a 1.10% to 1.12% to 1.09% path, while Fed funds futures continued to imply a 100% chance of a rate hike in December. The month-end portfolio rebalancing by fund managers is expected to be significant, with equities having outperformed bonds by 11% in November – the largest such outperformance since 2009.

Currencies:  The US dollar index continued to correct lower, down 0.3% on the day. EUR bounced off 1.0567 to 1.0650. A Reuters story quoted unnamed ECB sources who said it was prepared to buy Italian bonds if Sunday’s referendum caused an unwelcome jump in yields. USD/JPY rose from 112.00 to 113.34 but later retraced to 112.34. AUD is little changed after falling to 0.7433 and retracing to 0.7484. Outperformer NZD extended its multi-day rally from 0.7050 to 0.7132 – a two-week high. AUD/NZD fell from 1.0560 to 1.0480."