A late summer lull

There’s a “late summer lull” feel to markets this week with the main currency pairs largely unchanged again. The euro continues to hover around the $1.11 level against the dollar  and at around 91.5p against sterling, while the latter remains around $1.21. Core bond yields fell back after spiking higher on Monday, while both US and European equities ended lower on the day

Italian politics can always be relied upon to generate some excitement. The Prime Minister resigned yesterday rather than face a vote of no confidence, while moves are afoot to form an alternative government made up of Five Star, one of the outgoing ruling parties, and the PD opposition party with a view to avoiding another election. Italian bonds like this idea as 10-year yields nudge lower

Boris Johnson meets Angela Merkel today but the lady is not for turning, with the German Chancellor reiterating that the backstop is part of the non-negotiable Withdrawal Agreement and the route for any progress is via the Political Declaration

The Fed’s Daly says she voted for a cut in interest rates at the last monetary policy meeting “based around my desire to see our economic expansion continue – not because I see an impending downturn on the horizon”

The minutes of the recent Fed meeting at published today while data-wise existing home sales are due in the US