Bond yields march higher

Amid rising bond yields, strong economic data and turmoil in US politics, the main currency pairs are actually not much changed this morning, with the dollar trading at around $1.0470 to the euro and $1.2070 to sterling, leaving EUR/£ at around 86.7p as it continues to trade in a very narrow range.

US bond yields continue to march higher with 10-year yields rising by 12bps yesterday and adding another 5bps to 4.85% in overnight trading, while 30-year yields have increased by 30bps so far this week to reach 5.0% for the first time since 2007. German and UK 10-year yields have also risen further (albeit lagging the scale of the increase in US yields) to 3% and 4.65% respectively.

The number of job openings in the US unexpectedly rose in August according to data published yesterday, increasing by almost 8% from July, although over the three months to August they were still well down on the three months to May.

Having helped to avert a US government shutdown, the Speaker of the House of Representatives, Kevin McCarthy, has paid with his job, losing a vote of confidence yesterday. An interim Speaker is now in place, with a vote on a new House leader expected to take place next week.

Fed’s Bostic says he is not “in a hurry to raise” (interest rates) but nor is he “in a hurry to reduce (them) either,” adding that he favours holding rates steady “for a long time.”

Ahead of Budget 2024 in Ireland next week, the latest Exchequer Returns show tax receipts in January-September were up 6.1% on the same period in 2022, although behind target by almost 1.5% due largely to a shortfall in corporation tax (which in the month of September was down more than 12% on the same month last year).

Economic data due today includes services PMIs in the Euro area, UK and US; retail sales and producer prices in the Euro area; and the ADP employment report, factory orders, and the ISM services index in the US.