Dollar recovers some ground

US yields resumed their move higher yesterday, having dipped on Friday, with 10-year yields rising by 5bps or so and setting a new high of 2.63% in the process. The dollar has also recovered some ground and is trading close to $1.06 against the euro this morning (from over $1.07 first thing yesterday)

As noted yesterday, last Friday’s very solid employment report in the US copper-fastened the case for an increase in interest rates at this week’s Fed meeting (announcement on Wednesday at 6pm Irish time), and the market is now 100% priced for a 25bps hike

ECB member Smets says the central bank’s latest policy statement ‘does not…signal a coming change in the monetary-policy stance’, pushing back on the markets’ interpretation of last Thursday’s meeting and press conference and the possibility of an increase in interest rates

The UK government’s Brexit Bill has passed through parliament, paving the way for Theresa May to trigger Article 50 although she’s not now expected to do so until the final week of this month. Meanwhile, Scotland’s First Minister is seeking to get agreement to hold a second referendum on independence (she hopes in late 2018 or early 2019). Sterling is a touch weaker this morning, trading close to 88p against the euro and at $1.21 against the dollar

Data due today includes industrial production in the Euro area