Bond yields up again

While the major exchange rates are again relatively stable this morning, with the euro trading at around $1.1050 and 89p against the dollar and sterling respectively, bond yields continue to back up ahead of the forthcoming ECB and Fed meetings. In the US, 10-year yields have climbed by almost 20bps in a little over a week to over 1.70%, while equivalent German yields, though still deep in negative territory, have risen by more than 15bps to -0.55% over the same period

Some easing of tensions on the US-China trade front – the two sides are due to restart talks soon and China has announced a range of US imports to be exempted from an increase in tariffs – has also contributed to the rise in yields, as has the reduced risk of a ‘no deal’ Brexit, at least on 31st October (UK 10-year yields have risen by 25bps since early last week)

According to unnamed ECB ‘sources’ reported yesterday, “it is almost certain QE will go’s only a matter of time and timing” and it’s likely to be announced as part of a stimulus package at tomorrow’s meeting

The UK labour market is proving quite resilient notwithstanding the continuing overhang of uncertainty. The number in employment rose by more than 1% year-on-year in the May-July period, the unemployment rate dipped to 3.8% (from the 3 months to June), and the annual growth in average weekly earnings picked up to 4%, the fastest pace of increase since mid-2008

It is quiet enough on the data front today with US producer prices the only release of note