Bond yields nudge up

The euro and the pound have both regained a little ground against the dollar to trade at about $1.19 and $1.39 respectively this morning, leaving the single currency-sterling exchange rate hovering a touch above 85.5p (the trading range for this pair has been very tight – 85.5p to 86.5p – over the past month or so)

US and German 10-year bond yields both nudged up yesterday by circa 5bps to around 1.50% and -0.15% respectively , while equity markets had a decent enough start to the week gaining around 1% or so

ECB President Christine Lagarde says the “outlook for the (Euro area) economy is…brightening as the pandemic situation improves, the vaccination campaigns progress, and confidence begins to rise”, adding that the central bank expects “economic activity to accelerate…amid support from fiscal and monetary stimulus and a vigorous bounce-back of services activity in particular”

Fed Chair Powell says “inflation (in the US) has increased notably in recent months” reflecting  “the pass-through of past increases in oil prices to consumer energy prices; the rebound in spending as the economy continues to reopen; and the exacerbating factor of supply bottlenecks, which have limited how quickly production in some sectors can respond in the near term”. However he notes that “as these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal” (of 2%)

Data due today includes consumer confidence in the Euro area and existing home sales in the US