Equity markets regain ground

The start to this week was much less eventful than was the case last week. In contrast to the plunge in equity markets that occurred last Monday, stocks rose for a second consecutive session yesterday with both the US and Europe gaining around 1.5%

The dollar has ceded some ground as equities have rebounded. It has fallen to over $1.23 against the single currency, from close to $1.22 late last Friday, and has weakened to under Y108 against the yen. Interestingly, sterling is making little headway against the US currency. It is largely unchanged at around $1.3850, so leaving it slightly lower against the euro at around 89p

Government bond yields in the core markets were unchanged to marginally up on the day, and are trading at or close to their recent highs

Bank of England member Vlieghe says that three or more hikes in UK interest rates may be needed to get inflation back to its 2% target over the medium term

CPI inflation data are due in the UK this morning. According to the consensus forecast, the headline rate its expected to have dipped for a second consecutive month in January, to 2.9% from 3% in December, while the core rate is expected to tick up to 2.6% from 2.5%