Analysts at Westpac offered a market wrap.
“Global market sentiment: Strong US data pushed US interest rates and the US dollar higher but the reaction was not sustained. Equities made fresh record highs.
Interest rates: US 10yr treasury yields rose from 2.47% to 2.52% and 2yr yields rose from 1.23% to 1.26% in response to stronger than expected CPI and retail sales data. Fed fund futures firmed 2bp-4bp. The April contract is now trading at 0.73% (which is 10.5bp above the current midpoint FFR of 0.625%, which implies around a 40% chance of a rate hike in March).
Currencies: The US dollar index is currently unchanged on the day, but earlier jumped to a one-month high following the US data surprises. EUR fell to 1.0521 following the data but later rebounded to 1.0609. USD/JPY jumped to 114.96 before falling to 113.87. AUD fell to 0.7637 before rising to 0.7709 – a three-month high. NZD similarly touched 0.7147 before 0.7214. AUD/NZD remained elevated, ranging between 1.0670 and 1.0710.”