Markets unmoved with a lack of data out yesterday

A quiet start to the week was to be expected given the extended bank holiday weekend for much of the world. While US markets were online Monday, the absence of European liquidity took its toll on conviction across all financial markets. According to the updated analysis, the UK's total debts - the aggregate of household debt, business, financial and government debt - was equivalent to 484% of GDP, or national output, towards the end of last year. This is very similar to the Japanese economy working off 514% of their GDP.

The national debt of the UK economy is falling recently, which most would regard as good news and has reflected in sterling strength across all its major counter parties. Economic growth in the UK is happening at a time when the finances of households, businesses and banks are being strengthened (although, to state the obvious, the indebtedness of government continues to rise). But this strengthening of what you might think of as the nation's balance sheet, this reduction in indebtedness, is perhaps not happening fast enough - in that the UK still has the dubious privilege of being a world leader for indebtedness, and any significant and unexpected increase in interest rates might be highly damaging to the UK economy moving forward.

GBP/EUR traded flat inside its range yesterday trying to test the area of resistance of 1.22 when it peaked to a daily high of 1.2195. Low impact data came out in Construction Output at 9:00am yesterday reading at 6.7% as well as consumer confidence for April read at -8.70 while the consensus was -9.05.

Today we have the Markit Manufacturing PMI coming out at a consensus of 53.1. Another reading above 50 indicates a bullish state for business conditions in the European economy. As for EUR/USD the pair consistently traded above 1.38 the figure yesterday.

In the United States, existing home sales beat expectations by 4 thousand yesterday totalling to 4.59 million for the month of March. The only data to look out for the remainder of the week in the US is Durable Goods at 12.30pm on Thursday. Treasury two-year notes were set to be sold yesterday at the second-highest yield at an auction of the security since 2011 on speculation the Federal Reserve will raise interest rates before the debt matures.

Benchmark 10-year note yields touched the highest level in more than two weeks as a report showed the Richmond Fed manufacturing index (BGSV) rose more than forecast in April, reinforcing the central bank’s view that the economy is improving and stimulus cuts are warranted. The two-year securities have returned 0.3 percent this year through yesterday, compared with 1.9 percent for the broader Treasury market, according to Bank of America Merrill Lynch indexes. GBP/USD opened yesterday at 1.6781 and closed the London session at 1.6834.