‘Risk off’ tone in markets

The ‘risk off’ tone in markets continued yesterday. One of the beneficiaries in such an environment is the Japanese yen, which strengthened quite a bit (to well under Y110) against the dollar. Among the other main exchange rates, the euro was slightly firmer against the dollar at just over $1.06, while sterling gained some ground against the dollar (to almost $1.25) and the euro (to just under 85p)

Stocks were under pressure for most of the time though the did manage to close off their intra-day lows. Bond yields in the core markets fell, most notably in the case of US bonds with 10-year yields declining by around 7bps to 2.30%

Fed member Williams says ‘we need to further raise our benchmark interest rate and bring it back to a normal level over this year and next year’

The annual rate of inflation in the UK was unchanged at 2.3% in March, having risen quite sharply over the previous few months, while the core rate nudged down to 1.8%.

Today sees the release of the latest labour market report in the UK. The consensus expects the unemployment rate to have remained unchanged at 4.7% in the 3 months to February, while the annual increase in earnings (ex bonuses) is expected to slow to 2.1% (below the current rate of inflation).