Equity markets advanced again and bond yields fell yesterday, helped by rate cut talk from Fed and ECB members, though there wasn’t a whole lot of movement in the main currency pairs. The euro is a touch softer against both the dollar and sterling this morning, at around $1.1350 and £0.8530 respectively, while sterling is holding its own against the dollar, trading at around $1.33.
Yesterday’s Events
The short-end led the decline in bond yields with US and German 2-yields falling by 6-8bps, while 10-year yields were 5-6bps lower on the day. European stocks added almost 0.5% and US indices closed with gains of up to 3%, while Asian equities are higher overnight.
Fed members Waller and Hammack said they are prepared to lower interest rates if the US economy and labour market weaken due to the impact of tariffs, with Hammack suggesting the Fed could move as soon as the next but one meeting in June if the data pointed in that direction. Meanwhile, ECB member Rehn said that if forecasts show inflation falling “below our 2% inflation target, then the right reaction is to cut rates further,” adding that a 50bps reduction shouldn’t be ruled out.
Retail sales data released in the UK a short while ago show volumes rose by 0.4% in March (the consensus forecast was for a decline of around 0.4%), while the February outturn was revised down to a gain of 0.7% (from 1%). For Q1 as a whole, sales volumes rose by 1.6% from Q4’24 and by 1.7% on the corresponding quarter last year. The increase in spending will contribute positively to Q1 GDP growth, which looks to have picked-up quite strongly from the final quarter of 2024.
The Day Ahead
It’s a quiet end to the week in terms of economic data, with final readings for the University of Michigan measures of April consumer confidence and inflation expectations due in the US.
Today's Talking Points 25.04.2025
Market Commentary
Equity markets advanced again and bond yields fell yesterday, helped by rate cut talk from Fed and ECB members, though there wasn’t a whole lot of movement in the main currency pairs. The euro is a touch softer against both the dollar and sterling this morning, at around $1.1350 and £0.8530 respectively, while sterling is holding its own against the dollar, trading at around $1.33.
Yesterday’s Events
The short-end led the decline in bond yields with US and German 2-yields falling by 6-8bps, while 10-year yields were 5-6bps lower on the day. European stocks added almost 0.5% and US indices closed with gains of up to 3%, while Asian equities are higher overnight.
Fed members Waller and Hammack said they are prepared to lower interest rates if the US economy and labour market weaken due to the impact of tariffs, with Hammack suggesting the Fed could move as soon as the next but one meeting in June if the data pointed in that direction. Meanwhile, ECB member Rehn said that if forecasts show inflation falling “below our 2% inflation target, then the right reaction is to cut rates further,” adding that a 50bps reduction shouldn’t be ruled out.
Retail sales data released in the UK a short while ago show volumes rose by 0.4% in March (the consensus forecast was for a decline of around 0.4%), while the February outturn was revised down to a gain of 0.7% (from 1%). For Q1 as a whole, sales volumes rose by 1.6% from Q4’24 and by 1.7% on the corresponding quarter last year. The increase in spending will contribute positively to Q1 GDP growth, which looks to have picked-up quite strongly from the final quarter of 2024.
The Day Ahead
It’s a quiet end to the week in terms of economic data, with final readings for the University of Michigan measures of April consumer confidence and inflation expectations due in the US.
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