Sharp rise in bond yields

Bond yields in the core markets rose quite sharply last week.This was led by the UK with 10-year yields rising by the best part of 20bps, partly reflecting stronger than expected third quarter GDP data, while equivalent German and US yields increased by around 17bps and 12bps respectively

Sterling is a little firmer after the Bank of England Governor Mark Carney announced he would extend his term by one year to June 2019.  It is trading at around 89.5p against the euro and is back above $1.22 against the dollar

The euro has gained some ground against the dollar and is trading just below $1.10 this morning

China PMI data overnight were better than expected – both the manufacturing and services indices rose in October – which is contributing to a positive opening for equity markets this morning

The Fed meets today and tomorrow. It is expected to keep interest rates unchanged but is likely to signal an interest rate increase in December (the market is attaching a >80% probability to a hike by the end of the year)

The Bank of England’s MPC is expected to keep interest rates unchanged this Thursday given the UK economy’s better than expected performance post the referendum, but it is still likely to retain a bias to ease policy again over the coming months

The key data release this week is the US employment report on Friday. Other data scheduled include PMIs in the main economies (today and Thursday)