Stocks sell off

The euro held its own against the dollar yesterday, notwithstanding quite a sharp sell-off in equity markets, and continues to hover around the $1.0850 level this morning. The single currency did gain against a generally softer pound though to trade above 88p, with sterling shedding more than a cent against the dollar, falling to around $1.23. Stocks in Europe and the US closed down 3-4% on the day, while core bond yields fell further with US 10-year yields below 0.60%. Oil prices have fallen further and Brent crude now below $17 per barrel

Italian bonds remain under a good bit of pressure with 10-year yields rising by another 20bps or so yesterday to circa 2.15% (and so not too far off their mod-March high of almost 2.45%)

ECB member Knot says the central bank is prepared to “step up” its bond purchases if that is needed, adding that the economy is far from “out of the woods” yet

The annual rate of CPI inflation in the UK dipped to 1.5% in March  from 1.7% in February, while the core rate also nudged down (to 1.6% from 1.7%)

The Department of Finance says Ireland’s economy could contract by 10.5% this year on account of COVID-19, though rebound next year to grow by 5.8%. It sees the unemployment rate averaging almost 14% in 2020 but coming back  down to just below 10% in 2021, while the necessary costs incurred to address the fall-out from the crisis (e.g. income supports) results in a budget deficit this year of around 7.5% of GDP (or €23 billion)

Data due today includes consumer confidence in the Euro Area