Dollar softer again

Equity markets gained ground over the course of last week as a whole, despite a wobble on Friday, with European and US indices rising by around 7% and 10% respectively. In line with this, the dollar lost some of its recent safe haven gains, slipping to over $1.11 against the euro for a time on Friday, its weakest level for a couple of weeks, and to almost $1.25 for a time against a generally firmer UK pound, which has strengthened by more than 2p against the single currency over the past week or so to trade at around 89.5p

Notwithstanding the rally in stocks – and having been relative volatile recently – bond yields in the core markets fell last week, perhaps in line with the significant easing of monetary policy undertaken by central banks, with US and German 10-year yields declining by 15-20bps to about 0.70% and -0.50% respectively

Helped by the ECB’s new bond purchase programme, bond yields in the so-called peripheral markets in the Euro Area had fallen significantly, with Italian 10-year yields in particular down almost 25bps last week and almost 100bps off their recent high in the middle of this month

The $2.2 trillion support package for the US economy passed by Congress has been signed into law by President Trump and will see, among other things, direct payments to US households to help them during the current crisis

ECB member Costa says the economic shock caused by COVID-19 may “peak” in the second quarter followed by a “gradual” normalisation later this year

Data to watch for this week include new jobless claims in the US on Thursday and the employment report there on Friday