Quiet start to the week

Markets were relatively quiet yesterday as it was Memorial Day in the US and a Bank Holiday in the UK. In any case, the euro has slipped to just below $1.07 against the dollar and to 86.5p against sterling this morning, while the pound is trading at $1.2350 against the US currency.

In government bond markets, German 10-year yields have more than reversed most of last week’s fall, declining by almost 15bps to 2.40%, while equivalent US and UK yields are also lower this morning at around 3.75% and 4.28% respectively.

ECB member de Cos says “we think that we still have some way to go in tightening monetary policy, although we also think that we are closer to the end (of interest rate hikes).”

Ahead of CPI data for the Euro area on Thursday, the annual rate of CPI inflation in Spain fell to 2.9% in May from 3.8% in April according to the flash reading published earlier this morning

Also in Spain, the Prime Minister Pedro Sanchez has called a a snap election for July 23, after his Socialist party suffered heavy losses in regional and local elections at the weekend.

Economic data due today includes money & credit growth and the Economic Sentiment Indicator in the Euro area, and consumer confidence and house prices in the US.