An intriguing week: now watch Yellen - ANZ

Analysts at ANZ explained that in what was an eventful and intriguing week, it was almost as though markets took a little time for themselves on Friday, partially retracing some of the moves seen earlier in the week.

Key Quotes

There was minimal data flow. And while the odd headline came out of the latest G7 finance ministers meeting (see page 2), it was more of a case of markets pausing for thought after the week’s big talking point; the repricing of Fed rate hike expectations following the minutes of the April meeting.

"Market odds of a June rate hike ended the week at around 30%, up from 4% a week ago. That is a significant repricing, particularly given how leveraged markets and broader asset prices have become to stimulatory monetary policy. We continue to see June as very much a ‘live’ meeting and think that even if the Fed preferred to wait for more Q2 data or the outcome of the EU referendum, a hike by July was likely."

"The data will obviously hold sway, and while the coming week is a little quiet on that front, the key releases ahead of the June meeting are non-farm payrolls and retail sales."

"Fed Chair Janet Yellen also has the opportunity to further shift market expectations when she talks in Philadelphia in early June, although interestingly Bloomberg are also now reporting that Yellen will engage in “a conversation about her ground-breaking achievements” at Harvard University this weekend."