Market wrap: Bannon resigns and risk sentiment improves - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: A slight rebound in risk appetite occurred after news that controversial Trump adviser Bannon had resigned. US bond yields and USD/JPY rose, and equities trimmed losses.  

Interest rates: US 10yr treasury yields initially dipped from 3.20% to 2.16%, but rebounded to 2.21% following the Bannon news. 2yr yields rose from 1.29% to 1.32%. However, Fed fund futures yields slipped further, pricing the chance of a December rate hike at around 38% (from 40%).

Currencies: The US dollar index ranged sideways and closed the day down 0.2%. EUR ground slightly higher, from 1.1720 to 1.1768. USD/JPY bounced from 108.60 to 109.60 coinciding with the Bannon news. AUD rose from 0.7980 to 0.7944. NZD rose from 0.7290 to 0.7335. AUD/NZD rose from 1.0805 to 1.0849, partly helped by a 7% jump in iron ore prices, taking them to a four-month high.

Economic Wrap

US consumer confidence (Michigan Univ.) rose from 93.4 to 97.6 (vs 94.0 expected), reflecting a large gain in the expectations component. A strong labour market, low fuel prices, and only moderate pullback in share prices are keeping consumer sentiment elevated. 5-10yr inflation expectations slipped from 2.6% to 2.5%."