US stocks start week on positive note

Despite continuing geo-political tensions, mainly related to North Korea, equity markets in the US put in a solid performance yesterday with the main indices gaining almost 1%. It was relatively quiet on the currency markets, however, with the major exchange rates largely unchanged. The euro is trading close to $1.0650 against the dollar this morning and at just under 85p against sterling

US bond yields closed  a touch higher yesterday, following a very substantial decline last week which saw 10-year yields fall by the best part of 15bps to 2.25%.  Equivalent German and UK yields also fell last week although the decline was more modest at around 5bps (to 0.19% and 1.04% respectively)

China’s economy grew by 6.9% year-on-year in the first quarter of 2017, according to the latest GDP report, following growth of 6.7% in 2016. The authorities are targeting growth this year of around 6.5%, or ‘better if possible’

The markets will be turning their attention to this coming weekend’s first round of voting in the French presidential election, with Le Pen and Macron out in front and neck and neck in the polls. French bond yield spreads over Germany have been widening out gradually again over the past couple of weeks although they remain below the levels they reached in late February

Data due for release this week include retail sales in the UK and flash PMIs in the Euro area, both scheduled for Friday