UK on Lockdown til July
Equities turn flat in Europe
Nikkei 1.05% Dax -0.25%
UST 10Y 0.69%
Asia and the EU
North America Open
Equities lost much of their verve in European session trade giving up the gains earned in Asia and turning negative on the day on a slow, news- free Monday with markets mostly treading water after gains of last week.
In the UK Boris Johnson’s government announced an easing of the lockdown measures with some non-essential retail to open in June while most of the economy was to be open in July. The announcement, however, was marred by confusion on new social distancing rules and cable fell to session lows trading below the 1.2400 figure as a result.
Generally, the buck was better bid across the board with USDJPY the strongest of all as the pair cleared the 107.00 barrier and traded to a high of 107.26 in morning London dealing. The FX market appears to be betting on US outperformance once again as market participants believe that the US will rebound faster and stronger than Europe.
There is certainly some cause for that position given the fact that Europe appears to be highly fractured and unable to come up with any sort of unified fiscal stimulus plan to jump-start the economy. A key tell to the dollar rally will be the fixed income market. So far bond yields have barely budged from their lows and remain flat across the curve, but if US yields begin to uptick the dollar rally could really kick in with a vengeance. For now, however, just the relative strength of US yields is enough to keep the greenback at the front of the pack.