US dollar/bond yields edge lower

The dollar’s rally has stalled for now. It lost some ground to the euro and sterling yesterday, easing back to around $1.0650 and $1.25 respectively, despite stronger than expected US economic data (consumer confidence rose to its highest level since 2007 in November and Q3 GDP growth was revised up to over 3%)

Similarly, the rise in US bond yields has run its course (for now). 10-year yields edged lower again yesterday to close just below 2.30%, down from last Friday’s highs of over 2.4%

Fed member Powell says the case for an increase in US interest rates has ‘clearly strengthened since our previous meeting earlier this month’. The market is fully priced for a 25bps increase at the Fed’s December 13/14 meeting and now expects more or less a further two 25bps hikes during the course of 2017, bringing it broadly into line with what the Fed has been ‘guiding’ in its recent forecasts

Bond yields in Italy fell yesterday ahead of Sunday’s referendum, after a ‘sources’ story said the ECB is prepared to step up the pace of Italian bond purchases if necessary post the result of referendum

The Bank of England says risks to financial stability in the UK include Brexit, the large current account deficit and still high debt levels

OPEC meets today to try and agree a cut in oil output, while economic date due includes inflation in the Euro area and US