US economy expands in Q4

The euro and sterling have both slipped against the dollar to trade just below $1.09 and a touch under $1.24 respectively this morning, with the single currency-pound exchange rate trading at about 88p

Government bond yields are higher this morning – US and German 10-year yields are up to 3.55% and 2.25% respectively and equivalent UK yields have risen to 3.35%

Equity markets had a positive session yesterday with the S&P 500 in the US gaining around 1%

The US economy grew by 0.7% in the final quarter of last year according to yesterday’s preliminary GDP report, slightly stronger than the consensus forecast and only marginally lower than the 0.8% growth recorded in Q3

Economic data due today include PCE inflation for December in the US, which is the Fed’s target measure of inflation.  The consensus expects the annual headline and core rates to have eased further last month to 5.0% and 4.4% respectively