Further rise in bond yields

The euro and sterling have both lost ground more ground against the dollar to trade below $0.98 and under $1.12 respectively this morning, which leaves the single currency-pound exchange still hovering around 87.5p

Government bond yields continue to increase as markets continue to price in much higher central bank interest rates over the coming months. US 10-year yields have risen by the best part of 20bps to 3.70%, while equivalent UK and German yields are up around 15bps and 10bps to 3.45% and 1.95% respectively

Following this week’s central bank meetings, markets expect Fed and Bank of England interest rates to rise to around 4.50% to 4.75% by the middle of next year, from 3.0%-3.25% and 2.25% respectively today, with ECB rates seen increasing to around 3% from 1.25% (refi rate) currently

ECB member Schnabel says “inflationary pressures (in the Euro area) have become much more broad-based”, adding that they have somehow crept into all parts of the economy”

The UK Chancellor will present the new government’s ‘growth plan’ today, having confirmed that the recent rise in National Insurance contributions will be reversed from November

Data due today includes flash PMIs for September for the Euro area, UK and US