US yields, dollar higher

We are seeing a notable rise in US bond yields and a firming of the dollar across the board, as the market prices in a greater chance of an increase in US interest rates before the end of this year and the US administration puts tax cuts back on the agenda

The dollar has strengthened against the yen, sterling and of the euro – it’s currently trading at just over $1.17 against the single currency – while US 10-yields have risen by more than 10bps to over 2.35% since the start of this week. Equivalent yields in the UK and Germany are following US yields some of the way up, rising by around 5-6bps

The latest tax proposals from the Trump administration include a reduction in the corporate tax rate from the current 35% to 20%, and collapsing the numerous individual tax rates into just three. Whether and to what extent this might get through Congress remains to be seen

Fed member Rosengen says it is possible the unemployment rate in the US will fall below 4% (it is 4.3% currently), but with inflation low, the Fed can proceed gradually though regularly in raising interest rates

Data due today include the Euro area Economic Sentiment Indicator,  UK consumer confidence, and a third and final estimate of second quarter GDP growth in the US