(WebFG News) – 0748: The FTSE 100 is being called around 20 points higher, according to traders in the City. The pound is falling again this morning, a new leg lower after last night's one caused by Mark Carney comments. It's down 0.2% this morning versus the dollar to 1.4061.
0745: The pound fell yesterday evening to after comments from BoE boss Mark Carney. The Canadian central banker said an interest rate rise is “likely” in 2018 but any tightening will be gradual.
Marshall Gittler, chief strategist at ACLS Global, said the big trend overnight was a general rise in bond yields and steepening yield curves. “The origin isn't clear, but yields started to rise from the start of the day in Europe. Gilts sold off the most (10 yields +10 bps) despite Carney's comments and the weak economic news there, which is somewhat of a puzzle.
“Treasuries went along with the trend; the yield on 10-year Treasuries poked its nose above 2.90% again (2.91%) and seems to be headed to the 3.0% level. Furthermore, the Treasury curve steepened by 4 bps, ending nine consecutive days of flattening. The combination of bear steeping in the bond market of this magnitude and a fall in stocks is historically uncommon, as usually a steeper bond curve indicates either expectations of rising economic activity or less demand for safe investments. Rising US bond yields supported USD.”