Political worries in markets

Political uncertainty and concerns ahead of elections in some EU countries over the next few months, notably France, seemed to weigh on markets yesterday. European equities lost around 1.0% on the day, while French 10-year bond yield differentials over Germany increased by around 10bps (with Italian and Spanish differentials also widening out)

The euro currency was also under pressure for the same reasons and slipped further overnight. It is currently trading below $1.07 against the dollar

ECB President Mario Draghi said yesterday that the ‘euro is irrevocable’ (something he has stated many times before), adding that ‘it is easy to underestimate the strength of this commitment’ to Economic and Monetary Union (EMU)

Draghi also reiterated that continued  monetary policy support is need ‘if inflation rates are to converge towards our objective with sufficient confidence and in a sustained manner’

It is relatively quiet on the data front today with UK house prices and US trade the main releases