Bond yields edge lower

The euro is not much changed against the dollar this morning as it continues to trade in and around the $1.16 level. It’s much the same for sterling which is hovering around the $1.37 mark against the US currency, in turn leaving the euro-pound exchange rate relatively steady close to 84.5p

Government bond yields continue to edge down with US and UK 10-year yields both almost 10bps lower so far this week at 1.53% and 1.06% respectively, while equivalent German yields are down to around -0.17%

Bank of England MPC member Silvana Tenreyro says increasing interest rates to combat a temporary rise in inflation risks being “self defeating” –  noting that by the time higher interest rates were having a major effect on inflation, the impact of higher energy prices “would already be dropping out of the inflation calculation”

ECB’s Christine Lagarde says she still views the recent pick up in Euro area inflation “as being largely driven by temporary factors”, adding that “so far, there is no evidence of significant second-round effects through wages ”

Fed official Bullard thinks there is “some probability” that higher inflation in the US “will naturally dissipate over the next six months”, but he doesn’t believe that there is “such a strong case that we can count on it”.

Data due today includes retail sales and consumer confidence in the US