Bond yields head south

The euro and sterling have both drifted lower against the dollar to trade at around $1.05 and just below  $1.22 respectively this morning, leaving the single currency-pound exchange rate largely unchanged at about 86p

European stocks reversed some of yesterday’s early losses, finishing a little less than 1% lower on the day, but they have resumed on the back foot this morning , shedding around 1% in early trading

Government bond yields have headed south, with German and UK 10-year yields now down around 25bps from Tuesday’s close to 1.50% and 2.40% respectively and equivalent US yields down around 15bps to circa 3.10%

Fed Chair Jerome Powell says it will be “very challenging” to achieve a soft landing for the US economy as interest rates rise and that a recession is “a possibility”, while warning that the central bank cannot allow high inflation to become “entrenched”

Consumer confidence in the Euro area fell for a second month running in June and close to the record low recorded in April 2020, at the beginning of the COVID-19 pandemic

Data due today includes flash PMIs for June for the Euro area, UK and US, with weekly jobless claims numbers scheduled in the US as well