EUR

Markets are rallying this morning on optimism surrounding the prospect of more easing from the Federal Reserve as well as the growing likelihood of trade “deals” between the United States and its partners. Yields are down across the curve as investors bet a slowing economy could give central bankers more room to cut rates and equity indices are climbing in line with hopeful statements from administration officials currently negotiating agreements with Japan, India, and other countries. The dollar is up sharply. Data published yesterday overstated the scale of the downturn in the US economy. A massive jump in the trade...

A six-day improvement in risk appetite appears to be stalling out across the financial markets this morning, bolstering a “mean-reversion”* trade that has seen the dollar creep higher against most of its rivals through the early part of the week. Treasury yields are ticking higher, North American equity indices are poised for losses at the open, and safe-haven currencies are outperforming their risk-sensitive brethren. The American economy shrank for the first time since 2022 in the first quarter, but the slowdown wasn’t as profound as the headline number would suggest. Inflation-adjusted gross domestic product contracted at an annualised -0.3-percent pace...