Bond yields fall as stocks sell off

The euro and sterling are both a bit firmer against the dollar this morning at just under $1.06 and north of $1.19 respectively, while the pound has gained some more ground against the single currency to trade close to 88.5p

Government bond yields are a good bit lower this morning on a mini “flight to quality” following a sell-off in equity markets – US stocks closed down around 2% yesterday led by a decline in bank shares and European indices are off almost 2% this morning – with US 10-year yields falling to around 3.80% and equivalent German yields down to 2.50%

The UK economy performed better than expected in January with GDP increasing by 0.3% from December according to data released earlier this morning, ahead of the 0.1% gain expected by the consensus and driven by a pick up in activity in the services sector

The key economic data release today is the February employment report in the US, which will be particularly closely watched by the Fed ahead of its next interest rate decision later this month. The consensus expects job gains of about 220k, after an increase in employment of almost 520k in January, with the unemployment seen remaining at 3.4% and earnings growth picking up to 4.7% year-on-year from 4.4% in January