MArket wrap: BoE delivered more stimulus than expected - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: The BOE delivered more stimulus than was expected (25bp cut to 0.25%, GBP70bn fresh QE, and a new funding scheme), causing global interest rates to fall.

Interest rates: The BOE decision surprised global interest rates lower, led by UK 10yr gilt yields which fell from 0.80% to 0.63% - a record low. 10yr treasury yields fell from 1.55% to 1.48%, while US 2yr yields fell from 0.68% to 0.64%. Market pricing of the Fed funds rate fell slightly, implying around a 20% chance of a rate hike in September, a 40% chance by December, and 100% not until late 2018.

Currencies:  The US dollar index is slightly firmer. EUR ranged sideways between 1.1114 and 1.1148. GBP was the day’s underperformer following the BOE surprise, falling from 1.3340 to 1.3103. USD/JPY ranged sideways between 101.01 and 101.64. AUD outperformed, extending the day’s rise from 0.7600 to 0.7640 – a two-week high. NZD similarly rose from 0.7150 to 0.7201 but slipped back to 0.7175. AUD/NZD nudged higher from 1.0620 to 1.0637."