Bond yields head north

The euro has fallen back against the dollar following a stronger than consensus jobs report in the US on Friday, dipping below $1.02, while sterling has also lost ground to the US currency, slipping to under $1.21. This is turn leaves the euro-pound exchange rate hovering in and around 84p

Government bond yields also rose quite sharply following the jobs report, with US and German 10-yields increasing by around 15bps to 2.85% and 0.85% respectively and equivalent UK yields up a similar amount to 2%

Employment in the US rose by 528,000 in July according to Friday’s report, following an upward revised gain of almost 400,000 in June, while the unemployment rate dipped to a new low of 3.5% and earnings growth remained strong at over 5% on an annual basis

Fed member Bowman says “my view is that similarly-sized increases (in interest rates) should be on the table until we see inflation declining in a consistent, meaningful, and lasting way,” referring to the 75bps hike in rates that occurred at the central bank’s July meeting

Economic data due this week includes CPI inflation in the US on Wednesday and second quarter GDP in the UK on Friday. Ireland data includes CPI inflation and residential property prices on Thursday and Friday respectively