With concerns about the country’s fiscal position remaining to the fore, the sell-off in US government bonds accelerated yesterday, while US equity markets ended well down on the day. However, having slipped against the euro and sterling early in yesterday’s session, the dollar remained in relatively tight ranges thereafter. It is trading at $1.1320 and $1.3420 respectively this morning, little changed from yesterday morning really, while EURGBP is trading at about £0.8420, down from yesterday’s best levels of around £0.8460.
Yesterday’s Events
US government bond yields rose sharply with relatively weak demand at an auction of 20-year bonds adding to the move higher; 30-year bond yields increased by the best part of 15bps to 5.10%, the highest level since late 2023 (at the peak of the Fed’s interest rate-hiking cycle), while 10-year yields increased by just over 10bps to 4.60%. Elsewhere in bond markets, German and UK yields rose by 4-5bps across the curve.
In equity markets, a decline in US stocks accelerated during the course of the day as bond yields rose, the main indices closing 1.6% to 1.9% lower. European stocks ended flat on the day, but they are under pressure this morning, down around 0.5% at the start of play.
ECB Vice-President De Guindos says “the disinflationary process (in the Euro area ) is ongoing” with the central bank on track on reach its 2% inflation target “sooner than later”. He also notes that lower energy prices and the recent appreciation of the euro exchange rate will give a “downward push” to inflation.
The Day Ahead
Looking to the day ahead, economic data releases include flash PMIs for May in the Euro area, UK and US, as well as weekly jobless claims and existing home sales in the US.
Today's Talking Points 22.05.2025
Market Commentary
With concerns about the country’s fiscal position remaining to the fore, the sell-off in US government bonds accelerated yesterday, while US equity markets ended well down on the day. However, having slipped against the euro and sterling early in yesterday’s session, the dollar remained in relatively tight ranges thereafter. It is trading at $1.1320 and $1.3420 respectively this morning, little changed from yesterday morning really, while EURGBP is trading at about £0.8420, down from yesterday’s best levels of around £0.8460.
Yesterday’s Events
US government bond yields rose sharply with relatively weak demand at an auction of 20-year bonds adding to the move higher; 30-year bond yields increased by the best part of 15bps to 5.10%, the highest level since late 2023 (at the peak of the Fed’s interest rate-hiking cycle), while 10-year yields increased by just over 10bps to 4.60%. Elsewhere in bond markets, German and UK yields rose by 4-5bps across the curve.
In equity markets, a decline in US stocks accelerated during the course of the day as bond yields rose, the main indices closing 1.6% to 1.9% lower. European stocks ended flat on the day, but they are under pressure this morning, down around 0.5% at the start of play.
ECB Vice-President De Guindos says “the disinflationary process (in the Euro area ) is ongoing” with the central bank on track on reach its 2% inflation target “sooner than later”. He also notes that lower energy prices and the recent appreciation of the euro exchange rate will give a “downward push” to inflation.
The Day Ahead
Looking to the day ahead, economic data releases include flash PMIs for May in the Euro area, UK and US, as well as weekly jobless claims and existing home sales in the US.
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