In the euro area, consumer confidence for April is due to be released

Market movers today

• In the euro area, consumer confidence for April is due to be released. Consumer confidence has stagnated at 0.1 for the past two months, after rising steadily throughout 2017 and consensus is for fall to -0.1 in April. Even so, consumer sentiment will remain above its long-run average and point to robust private consumption growth ahead. The Fed's Mester (voter, hawkish) and Evans (non-voter, dovish) are due to speak on the economy and monetary policy.

• In Scandinavia, manufacturing confidence for Q1 is being released in Norway and Danish consumer confidence for April is due out (see next page).

Selected market news

Global yields have seen upward pressure over the past 24 hours. The sell-off in global FI markets were most pronounced in the UK Gilt market where the yield on the 10-year Gilt rose 10bp. But also German and periphery yields saw pronounced upward pressure with the 10-year Bund yield 7bp higher. There were no obvious drivers for the sell-off but a combination of renewed focus on commodity prices and supply from France and Spain probably drew yields higher in the European market. The negative sentiment was carried over to the US where 10Y US treasury yields rose 5bp to 2.92%. We note the curves for 2s10s and 5s30s steepened after flattening significantly over the past couple of weeks. We also saw that 10Y US breakeven inflation expectations rose once again, underlining the impact of higher commodity prices.

However, we doubt we are in for a significant new jump in yields as in January and February where 10Y Germany rose 35bp over six weeks. Yesterday, we published a research paper where we looked at the global business cycle (see link to the right). We argue that there are clear signs that the global business cycle peaked in early 2018. Furthermore, our MacroScope models point to a further deceleration over the coming quarters. The recent uncertainty over a potential trade war is likely to reinforce this picture. While the cycle is softening, we still expect growth levels to stay above potential growth, as US fiscal easing will temper any deceleration in 2019. Nevertheless, declining PMI levels across regions tends to cause some anxiety about the strength of the recovery and put a cap on bond yields.

Hence, if global yields are to see a further strong upward pressure the driver needs to be a new spike in commodity prices or change in rhetoric from central banks. We doubt the latter will be the case if the global business cycle is weakening, see also our new ECB update . The sanctions against Russia could still push some metal prices higher and the oil market, which has rebalanced this year (lower stocks), could be affected if the Trump administration decides to take a tougher stance on Iran. In respect of central bank rhetoric, note that GBP weakened last night after BoE Governor Mark Carney struck a dovish tone in an interview, stating that a few rate hikes may be warranted over the next few years, thus essentially questioning whether a May hike is a done deal after all. Carney came after the close of the Gilt market.

The higher yields weighed on US stocks, but the market recovered some of the losses after Deputy Attorney General Rosenstein said Trump is not the target of the Mueller investigation.

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