Trump extends ceasefire

Markets were under pressure yesterday, with bond yields higher and stocks lower, as it became clearer that US-Iran talks were unlikely to resume in the near-term. Trump’s subsequent unilateral announcement of an extension of the ceasefire (until such time “as discussion are concluded, one way or the other”) is helping to restore some relative calm this morning. In FX, the euro and sterling were on the back foot against the dollar, falling to intra-day lows of around $1.1720 and $1.3475 respectively, but they have now recovered some ground, trading at about $1.1750 and just north of $1.35 respectively. EURGBP is a touch softer, hovering just below the £0.87 level.

Rising oil prices – Brent crude moved above $100 p/b at one stage – as well as some stronger than expected US economic data – contributed to an increase in bond yields across the main markets, though they are edging lower this morning alongside a modest retreat in oil prices (to just under $98 p/b). Equity markets ended lower on the day. European stocks shed around 1% for a second session running, while US indices were down a bit more than half a percent. European stocks have opened in positive territory today though.

Headline inflation in the UK picked up to 3.3% in March according to CPI data released a short while ago, in line with expectations and up from 3% in February. This was mainly due to a jump in energy prices, which rose by over 5% on the month. Core inflation – which excludes energy as well as food prices – dipped to 3.1% (from 3.2%), with a decline in goods inflation (to 0.8%) offsetting an increase in services inflation (to 4.5%).

ECB member Kazaks indicates there is no urgency for the central bank to raise interest rates, saying the central bank has the time to collect more data/information and “form our view” on appropriate monetary policy.

It is quiet for the rest of the day in terms of economic data, with Euro area consumer confidence the only release of note, while there are a large number of ECB members scheduled to speak during the course of the day.