Stocks remain under pressure

Stocks are still under the cosh, despite the efforts of governments and central banks, with US equities selling off again on Friday and the futures market pointing to a weak opening for European indices this morning. The dollar remains the currency of choice, strengthening by around 4 cents to $1.07 against the euro last week and gaining around 7 cents to $1.16 against the pound, the latter managing to rebound from an intra-week low of 94p against the single currency to end at 92p, which is where it kicks of this week

Core bond yields had been quite volatile recently although US 10-year yields did fall sharply on Friday as stocks sold off, declining by 30bps to 0.85%, and are lower again in overnight trading standing at 0.80% (which is still around 30bps off their year to date low set earlier this month)

Congress in the US is still working on what looks likely to be a sizeable fiscal support package for the economy, while the German government is proposing a package of measures including EUR156bn of spending; EUR200bn in loans/equity support for companies; and EUR400bn in loan guarantees

The most closely watched economic data this week will be tomorrow’s flash PMIs for March covering the major economies, which should capture the first effects of the impact of Covid-19 on activity. This as Fed member Bullard says the unemployment rate in the US could climb to 30% in the second quarter (from 3.5% currently) reflecting what he describes as a “planned, organised partial shutdown of the economy”