Market wrap: US GDP boosts yields - Westpac

Analysts at Westpac's market wrap...

Key Quotes:

"Global market sentiment: US GDP data was not as weak as expected, helping arrest declines in US interest rates and the US dollar. The NZD was the best performer, GBP the worst.

Interest rates: US 10yr treasury yields fell from 2.26% to 2.23% before the US GDP data helped a rebound to 2.25%. 2yr yields firmed slightly from 1.28% to 1.30%. Fed fund futures yields were little changed, pricing a June rate hike as an 85% chance.

Currencies: The US dollar index closed 0.2% higher on the day. EUR fell from 1.1235 to 1.1160. Underperformer GBP fell from 1.2900 to 1.2776 – a one-month low – amid polls showing the Conservative party’s lead has narrowed significantly. USD/JPY bounced off 110.88 to 111.42. AUD bounced off 0.7422 to 0.7461. Outperformer NZD rose from 0.7010 to 0.7077. AUD/NZD extended a multi-month decline from 1.0585 to 1.0526 – the lowest level since Feb – amid a persistent decline in iron ore (fell 3.8% on Fri to $57.91 – the lowest level since Oct).  

The weekly CFTC update showed US dollar index longs were pared further while EUR longs were increased to a 3 ½ year high. AUD longs and NZD shorts were both reduced. US 10yr treasury longs were increased to a ten-year high."