Daily Analysis

Yesterday saw a Greco-centric day with many negative noises coming out of large players in Europe. IMF’s Lagarde refused to extend the Greek repayment period and has since requested that Greek take adequate measures to improve their proposals and austerity measures if they wish to extend. The risk of a Greek exit has ‘never been higher’ and this is fairly reflected in the Bund, with the 10yr yield trading below the 0.07% this morning. Insert a James Bund 0.07% joke here. We also saw a large-scale move against Greece yesterday as 2yr yields rose to 26.2%, the highest level since the country’s restructuring in Q1.

This morning began with a mixed report from the UK with mixed data; ILO Unemployment posted an in- line figure with 5.6% on the headline. This was also coupled with UK Average Weekly Earnings printing a miss on the headline but a beat on the ex-bonus by 0.1%. The jobless claims change showed 20.9k fewer claimants, a miss on the expected 29.5k. After an algorithm-driven spike above 1.5000 on the June future we saw price dip lower again before moving to the upside in recent trade. The surprise move of the morning came from the leg lower in European equities. This has been attributed to many different sources, highlighting the confusing nature of the move as it had no original catalyst. This however led to the Bund breaking the high set yesterday at 16040. We saw this as a potential trading opportunity; The push lower in European bourses also allowed their US counterparts to make lwos on the session also. The S&P 500 currently trades at 3 day lows, testing S2 this morning; the move lower extended despite a beat on expectations from General Electric earnings by 1cent. The Risk-off trade we’re currently experiencing has not translated into the dollar but the inverse correlation that has eluded traders since the start of ECB QE has finally returned to the fore. Eurozone inflation this morning posted in-line across the board with the exception of the monthly Ex Food and Energy number which posted a slight miss.

Ahead today we have Inflation data from the US in the form of the CPI for March. We are expecting a lift from last month with a reading of 0.3% at the 1330BST release. This comes out with a host of subcomponents so traders are advised to remain fairly cautious when trading and discernment will be required to make accurate judgement calls when trading around this number. We also have Canadian inflation coming out at the same time if you’re interested. At 1500 BST we also have the University of Michigan sentiment readings, expected at 94. There is fairly little coming out of the US in terms of earnings with General Electric posting earlier in the session.

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