Quiet start to the week

It was a quiet enough start to the week with the euro and sterling both a touch firmer against the dollar trading just north of $1.02 and a little shy of $1.21 respectively, leaving the single currency-pound exchange rate by and large unchanged at 85p

European and US equity markets chalked up modest gains yesterday, while in government bond markets, US 10-year yields nudged up by around 5bps to 2.80% with equivalent German yields broadly flat at 1.0%

The ifo index of the business climate in Germany fell for a second month in a row in July , with firms’ assessment of the current situation and expectations for the future both deteriorating amid higher energy prices and the threat of a gas shortage

European wholesale gas prices have spiked higher after Gazprom said Russian supplies to the EU through the Nord Stream 1 pipeline would be cut by half (to 20% of capacity) – this will focus the minds of EU Energy Ministers holding an emergency meeting today to discuss a Commission proposal to reduce gas consumption by 15%

ECB member Kazaks says given ‘inflationary dynamics and the risks of (inflation) persistence”, the central bank should be ‘open to discussions’ about the size of the next increase in interest rates, suggesting he favours another 50bps hike

Data due today includes consumer confidence, house prices and new home sales in the US, while the IMF publishes updated world economic forecasts