The main currency pairs are not much changed from yesterday morning. The euro continues to hover just below the $1.08 level against the dollar and is trading at around £0.8370 against sterling, while the latter has dipped below $1.29 against the US currency. UK inflation data released a short while ago were weaker than the consensus forecast, which is weighing on the pound.
Yesterday’s Events
US bond yields nudged down a touch yesterday, partly on the back of some soft economic data, while German and UK yields were marginally higher on the day. In equity markets, European stocks rose by around 1%, largely playing catch-up with Monday’s gains in US equities, while the latter ended with small gains yesterday.
Headline CPI inflation in the UK fell back in February according to this morning’s release, declining to 2.8% from 3% in January, while the core rate also fell, to 3.5% from 3.7%, both a little lower than the consensus forecast (3% and 3.6% respectively). Within core, following a string of increases, goods inflation fell last month, to 1.1% from 1.6%, helped by a large decline in clothing and footwear price inflation, but services inflation remained unchanged and still elevated at 5%, which will be of some concern to the Bank of England.
In the US, consumer confidence declined for a fourth consecutive month in March according to the Conference’s Board measure. Consumers’ expectations were “especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low.”
The Day Ahead
For the day ahead, it’s relatively quiet in terms of economic data with durable goods orders in the US the only release of note. In the UK, Chancellor Rachel Reeves delivers her Spring Statement in Parliament, where she is expected to announce spending cuts of circa £10bn as she attempts to meet her fiscal rules.
Author: Brian Tim Moore
Tel: 1800 30 30 03 / +353 (0)1 790 0000
25 Mar 2025
Today's Talking Points 25.03.2025
Market Commentary
US equity markets rallied and US bond yields rose yesterday, driven by stronger than expected economic data and talk of targeted Trump reciprocal tariffs. Higher bond yields in turn supported the dollar, which has regained ground against the euro and sterling to trade just below $1.08 and close to $1.29 respectively this morning. EURGBP continues to trend gradually lower, trading at around £0.8350 this morning.
Yesterday’s Events
Tech stocks led the rally in US equity markets with the Nasdaq gaining more than 2%, while the S&P 500 added almost 2%. Elsewhere, European and UK stocks ended slightly lower on the day, though they have opened in positive territory this morning. In bond markets, US yields rose by the best part of 10bps, more than reversing last week’s decline, while German and UK were largely unchanged.
Private sector economic activity in the US picked up in March according to the latest Purchasing Managers’ survey (PMIs), led by a reacceleration in activity in the services sector. The equivalent surveys for the Euro area and the UK point to subdued growth again this month in the former and a modest pick-up in the pace of growth in the latter.
Fed member Bostic says the impact of tariffs will delay the return of inflation to its 2% target, which in turn means that any cut in interest rates will “have to be pushed back,” adding that he thinks just one quarter-point reduction may be appropriate this year.
The Day Ahead
Looking to the day ahead, economic data due include the IFO Index of business confidence in Germany, which is expected to have improved this month according to the consensus forecast, and the Conference Board’s March survey of consumer confidence in the US (confidence has fallen sharply over the past three months amid worries about the impact of tariffs).
Author: Brian Tim Moore
Tel: 1800 30 30 03 / +353 (0)1 790 0000
24 Mar 2025
Today's Talking Points 24.03.2025
Market Commentary
After hitting fresh 2025 highs of $1.0955 and $1.3015 respectively in the middle of last week, the euro and sterling lost a fair amount of ground against the dollar thereafter – with the latter benefiting amid a renewed slide in equity markets – falling to lows just below $1.08 and $1.29 on Friday afternoon before recovering a little into the close of business. They are both firmer at the open today, helped by talk that Trump’s reciprocal tariffs (due April 2) may be more narrowly focused than perhaps previously feared, trading at about $1.0850 and $1.2950. EURGBP fell to a low for the week of £0.8350 following Thursday’s Bank of England (BoE) meeting but has clawed back a bit of ground since to trade at about £0.8375 this morning.
Yesterday’s Events
After last week’s Fed and BoE meetings, which saw policy kept on hold at both, rate cut expectations firmed in the case of the former, with the market now pricing in about 60bps for the remainder of 2025, but were pared back in the case of the latter, with less than 50bps expected for the rest of the year. This in turn contributed to a decline in US government bond yields, which fell by 6-7bps on the week, and an increase in UK yields, which rose by around 6-9bps. Elsewhere in bond markets, there was a notable decline in German 10-year yields, which fell by more than 10bps, reversing some of the sharp rise that occurred over the previous two weeks following the announcement of increased infrastructure/defense spending.
While it was something of a week of two halves for equity markets, they still managed to eke out small gains overall. European stocks added just shy of 0.5% on the week, while the S&P 500 ended higher for the first week in five, adding around 0.5%.
The Day Ahead
Looking to the week ahead, economic data due include flash PMIs for March in the main economies today; CPI inflation and retail sales in the UK on Wednesday and Friday respectively; and PCE inflation and consumer spending in the US on Friday. On Wednesday, UK Chancellor Rachel Reeves delivers her Spring Statement in Parliament, with reports that she will announce public spending cuts of £10bn to meet her fiscal rules.
Author: Brian Tim Moore
Tel: 1800 30 30 03 / +353 (0)1 790 0000
20 Mar 2025
Today's Talking Points 20.03.2025
Market Commentary
The Fed left interest rates on hold (4.25%-4.5%) following yesterday’s meeting, as widely expected. Mainly because of the impact of tariffs, it lowered its forecast for GDP growth in 2025 and raised its forecast for inflation this year, though inflation is still expected to fall back close to target in 2026. The Fed kept intact the possibility of a couple of 25bps cuts in interest rates both this year and next, though Powell reiterated that the central back is not in a hurry to lower rates. In terms of market reaction, US equites rallied, and bond yields fell post the meeting, while the dollar initially retreated from its best levels of the day just before the Fed’s announcement before regaining ground. The euro and sterling are trading at around $1.0870 and $1.2970 respectively this morning, not much changed from yesterday morning, while EURGBP continues to hover just below £0.84. The Bank of England is up next – it announces its latest monetary policy decision at noon today with interest rates expected to remain on hold at 4.5%.
Yesterday’s Events
US equity markets closed 1%-1.5% higher on the day with most of these gains coming after the Fed’s announcement, though there hasn’t been much positive spill-over to European stocks which are little changed at the open today. In bond markets, US yields fell post meeting, by the best part of 10bps in the case of both 2-and 10-year yields, as the market priced back in a bit more in terms of expected Fed rate cuts this year (now at around 60bps). European yields are slightly lower at the start of play today.
In its post-meeting statement, the Fed noted that “economic activity has continued to expand at a solid pace, the unemployment rate has stabilized at a low level in recent months, and inflation remains somewhat elevated.” In its updated economic projections, it lowered its forecast for GDP growth this year to 1.7% from 2.1% in its December projections (after 2.5% in 2024) and raised its forecasts for headline and core inflation to 2.7% and 2.8% respectively, from 2.5% for both previously, with both expected to decline in 2.2% in 2026, close to the 2% target.
The Day Ahead
The focus today will be on the Bank of England’s latest monetary policy decision. Having lowered interest rates by 25bps to 4.5% last month, it is expected to stay on today’s meeting as it continues its “gradual and careful” approach to easing policy. Ahead of the meeting, labour market data released earlier this morning shows employment rose and the unemployment rate was unchanged (4.4%) in the three months to January, while the annual rate of growth in average weekly earnings (excluding bonuses) was also unchanged (at 5.9%), all broadly in line with expectations.
Author: Brian Tim Moore
Tel: 1800 30 30 03 / +353 (0)1 790 0000
19 Mar 2025
Today's Talking Points 19.03.2025
Market Commentary
US equity markets sold off yesterday, reversing some of the gains made over the previous couple of sessions, though European stocks advanced. Elsewhere, bond yields were broadly unchanged on the day, while the main currency pairs largely treaded water. The euro and sterling are both a touch weaker against the dollar this morning, ahead of the Fed’s interest rate decision later, trading at about $1.09 and $1.2970 respectively, with the single currency also slipping a little against the pound to £0.84. The Fed is widely expected to keep interest rates unchanged today, so the focus will be on what it signals about the outlook for monetary policy given Trump’s tariffs are likely to weigh on economic growth while at the same time putting some upward pressure on inflation.
Yesterday’s Events
Tech stocks led the decline in US equity markets with the Nasdaq down almost 2% (the S&P was off 1%), while European stocks outperformed, gaining almost 1% on the day. In government bond markets, yields were largely flat yesterday, while Germany is leading a modest decline in European yields this morning with 10-year yields down almost 5bps. They have been on a modestly declining trend over the past week or so – now down almost 15bps – having risen sharply following the announcement of increased infrastructure and defense spending (the amendment to the debt brake paving the way for the latter was passed in the Bundestag yesterday, as expected).
The ZEW index of economic sentiment in Germany rose sharply again in March according to the latest release, up almost 26 points from February, with the “brighter mood…due to positive signals regarding future German fiscal policy (and) the sixth consecutive interest rate cut by the ECB (which) means favourable financing conditions for private households and companies”. In the US meanwhile, manufacturing output rose again last month and over the three months to February was up 0.7% on the three months to November (which may reflect some front-running of production ahead of expected tariffs).
The Day Ahead
In terms of economic data for the day ahead, it is relatively quiet with labour costs for Q4 2024 and a final reading for CPI inflation in February both due in the Euro area.
Dealer Comments
Today's Talking Points 26.03.2025
Market Commentary
The main currency pairs are not much changed from yesterday morning. The euro continues to hover just below the $1.08 level against the dollar and is trading at around £0.8370 against sterling, while the latter has dipped below $1.29 against the US currency. UK inflation data released a short while ago were weaker than the consensus forecast, which is weighing on the pound.
Yesterday’s Events
US bond yields nudged down a touch yesterday, partly on the back of some soft economic data, while German and UK yields were marginally higher on the day. In equity markets, European stocks rose by around 1%, largely playing catch-up with Monday’s gains in US equities, while the latter ended with small gains yesterday.
Headline CPI inflation in the UK fell back in February according to this morning’s release, declining to 2.8% from 3% in January, while the core rate also fell, to 3.5% from 3.7%, both a little lower than the consensus forecast (3% and 3.6% respectively). Within core, following a string of increases, goods inflation fell last month, to 1.1% from 1.6%, helped by a large decline in clothing and footwear price inflation, but services inflation remained unchanged and still elevated at 5%, which will be of some concern to the Bank of England.
In the US, consumer confidence declined for a fourth consecutive month in March according to the Conference’s Board measure. Consumers’ expectations were “especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low.”
The Day Ahead
For the day ahead, it’s relatively quiet in terms of economic data with durable goods orders in the US the only release of note. In the UK, Chancellor Rachel Reeves delivers her Spring Statement in Parliament, where she is expected to announce spending cuts of circa £10bn as she attempts to meet her fiscal rules.
25 Mar 2025
Today's Talking Points 25.03.2025
Market Commentary
US equity markets rallied and US bond yields rose yesterday, driven by stronger than expected economic data and talk of targeted Trump reciprocal tariffs. Higher bond yields in turn supported the dollar, which has regained ground against the euro and sterling to trade just below $1.08 and close to $1.29 respectively this morning. EURGBP continues to trend gradually lower, trading at around £0.8350 this morning.
Yesterday’s Events
Tech stocks led the rally in US equity markets with the Nasdaq gaining more than 2%, while the S&P 500 added almost 2%. Elsewhere, European and UK stocks ended slightly lower on the day, though they have opened in positive territory this morning. In bond markets, US yields rose by the best part of 10bps, more than reversing last week’s decline, while German and UK were largely unchanged.
Private sector economic activity in the US picked up in March according to the latest Purchasing Managers’ survey (PMIs), led by a reacceleration in activity in the services sector. The equivalent surveys for the Euro area and the UK point to subdued growth again this month in the former and a modest pick-up in the pace of growth in the latter.
Fed member Bostic says the impact of tariffs will delay the return of inflation to its 2% target, which in turn means that any cut in interest rates will “have to be pushed back,” adding that he thinks just one quarter-point reduction may be appropriate this year.
The Day Ahead
Looking to the day ahead, economic data due include the IFO Index of business confidence in Germany, which is expected to have improved this month according to the consensus forecast, and the Conference Board’s March survey of consumer confidence in the US (confidence has fallen sharply over the past three months amid worries about the impact of tariffs).
24 Mar 2025
Today's Talking Points 24.03.2025
Market Commentary
After hitting fresh 2025 highs of $1.0955 and $1.3015 respectively in the middle of last week, the euro and sterling lost a fair amount of ground against the dollar thereafter – with the latter benefiting amid a renewed slide in equity markets – falling to lows just below $1.08 and $1.29 on Friday afternoon before recovering a little into the close of business. They are both firmer at the open today, helped by talk that Trump’s reciprocal tariffs (due April 2) may be more narrowly focused than perhaps previously feared, trading at about $1.0850 and $1.2950. EURGBP fell to a low for the week of £0.8350 following Thursday’s Bank of England (BoE) meeting but has clawed back a bit of ground since to trade at about £0.8375 this morning.
Yesterday’s Events
After last week’s Fed and BoE meetings, which saw policy kept on hold at both, rate cut expectations firmed in the case of the former, with the market now pricing in about 60bps for the remainder of 2025, but were pared back in the case of the latter, with less than 50bps expected for the rest of the year. This in turn contributed to a decline in US government bond yields, which fell by 6-7bps on the week, and an increase in UK yields, which rose by around 6-9bps. Elsewhere in bond markets, there was a notable decline in German 10-year yields, which fell by more than 10bps, reversing some of the sharp rise that occurred over the previous two weeks following the announcement of increased infrastructure/defense spending.
While it was something of a week of two halves for equity markets, they still managed to eke out small gains overall. European stocks added just shy of 0.5% on the week, while the S&P 500 ended higher for the first week in five, adding around 0.5%.
The Day Ahead
Looking to the week ahead, economic data due include flash PMIs for March in the main economies today; CPI inflation and retail sales in the UK on Wednesday and Friday respectively; and PCE inflation and consumer spending in the US on Friday. On Wednesday, UK Chancellor Rachel Reeves delivers her Spring Statement in Parliament, with reports that she will announce public spending cuts of £10bn to meet her fiscal rules.
20 Mar 2025
Today's Talking Points 20.03.2025
Market Commentary
The Fed left interest rates on hold (4.25%-4.5%) following yesterday’s meeting, as widely expected. Mainly because of the impact of tariffs, it lowered its forecast for GDP growth in 2025 and raised its forecast for inflation this year, though inflation is still expected to fall back close to target in 2026. The Fed kept intact the possibility of a couple of 25bps cuts in interest rates both this year and next, though Powell reiterated that the central back is not in a hurry to lower rates. In terms of market reaction, US equites rallied, and bond yields fell post the meeting, while the dollar initially retreated from its best levels of the day just before the Fed’s announcement before regaining ground. The euro and sterling are trading at around $1.0870 and $1.2970 respectively this morning, not much changed from yesterday morning, while EURGBP continues to hover just below £0.84. The Bank of England is up next – it announces its latest monetary policy decision at noon today with interest rates expected to remain on hold at 4.5%.
Yesterday’s Events
US equity markets closed 1%-1.5% higher on the day with most of these gains coming after the Fed’s announcement, though there hasn’t been much positive spill-over to European stocks which are little changed at the open today. In bond markets, US yields fell post meeting, by the best part of 10bps in the case of both 2-and 10-year yields, as the market priced back in a bit more in terms of expected Fed rate cuts this year (now at around 60bps). European yields are slightly lower at the start of play today.
In its post-meeting statement, the Fed noted that “economic activity has continued to expand at a solid pace, the unemployment rate has stabilized at a low level in recent months, and inflation remains somewhat elevated.” In its updated economic projections, it lowered its forecast for GDP growth this year to 1.7% from 2.1% in its December projections (after 2.5% in 2024) and raised its forecasts for headline and core inflation to 2.7% and 2.8% respectively, from 2.5% for both previously, with both expected to decline in 2.2% in 2026, close to the 2% target.
The Day Ahead
The focus today will be on the Bank of England’s latest monetary policy decision. Having lowered interest rates by 25bps to 4.5% last month, it is expected to stay on today’s meeting as it continues its “gradual and careful” approach to easing policy. Ahead of the meeting, labour market data released earlier this morning shows employment rose and the unemployment rate was unchanged (4.4%) in the three months to January, while the annual rate of growth in average weekly earnings (excluding bonuses) was also unchanged (at 5.9%), all broadly in line with expectations.
19 Mar 2025
Today's Talking Points 19.03.2025
Market Commentary
US equity markets sold off yesterday, reversing some of the gains made over the previous couple of sessions, though European stocks advanced. Elsewhere, bond yields were broadly unchanged on the day, while the main currency pairs largely treaded water. The euro and sterling are both a touch weaker against the dollar this morning, ahead of the Fed’s interest rate decision later, trading at about $1.09 and $1.2970 respectively, with the single currency also slipping a little against the pound to £0.84. The Fed is widely expected to keep interest rates unchanged today, so the focus will be on what it signals about the outlook for monetary policy given Trump’s tariffs are likely to weigh on economic growth while at the same time putting some upward pressure on inflation.
Yesterday’s Events
Tech stocks led the decline in US equity markets with the Nasdaq down almost 2% (the S&P was off 1%), while European stocks outperformed, gaining almost 1% on the day. In government bond markets, yields were largely flat yesterday, while Germany is leading a modest decline in European yields this morning with 10-year yields down almost 5bps. They have been on a modestly declining trend over the past week or so – now down almost 15bps – having risen sharply following the announcement of increased infrastructure and defense spending (the amendment to the debt brake paving the way for the latter was passed in the Bundestag yesterday, as expected).
The ZEW index of economic sentiment in Germany rose sharply again in March according to the latest release, up almost 26 points from February, with the “brighter mood…due to positive signals regarding future German fiscal policy (and) the sixth consecutive interest rate cut by the ECB (which) means favourable financing conditions for private households and companies”. In the US meanwhile, manufacturing output rose again last month and over the three months to February was up 0.7% on the three months to November (which may reflect some front-running of production ahead of expected tariffs).
The Day Ahead
In terms of economic data for the day ahead, it is relatively quiet with labour costs for Q4 2024 and a final reading for CPI inflation in February both due in the Euro area.