• Positive mood in equity markets during the week, favoured by positive US earnings and decreasing global concerns (geopolitical and protectionism worries). In this context equity volatility returned to hover around 15 points and main equity indices registered gains during the week.

• Oil prices stand close to their highest in three years amid the expectation of an extension of the agreement between main powers to eliminate the oil glut (see). This fact boosted commodity related stocks as well as the inflation expectations, that benefited from the increase in oil prices, and other commodities (mainly metals).

• This movement is consistent with increasing sovereign yields in main core countriessuch as the US (at their highest level in one month, and progressively converging to 3% in the 10Y tenor) and in the EZ also supported by fading safe-haven flows. European risk premiums continued narrowing as they increased at a slower pace than the German Bund. Peripherals are taking advantage of the expected upgrade of Spain’s sovereign rating by Moody’s and the muted effect of political noise in Italy.

• China’s GDP growth was also supportive. It reached 6.8% y/y, in line with the previous reading and the market expectation, (see). In this context of robust but moderating growth, the PBoC also decided to cut the reserve requirement ratio for banks but emphasized that it continued in a “prudent” monetary stance (see).

• Surprisingly low inflation in the UK, (see) decreased odds for an accelerated process of tightening in key rates. This trend was reinforced today as Carney showed a very dovish tone (see). In this context, the GBP depreciated against its main peers. In the EZ, the final data on inflation also surprised downwards, but with muted impact on financial markets (see).

• The EURUSD remained broadly stable during the week while EM currencies do not benefited from increasing commodity prices. The TRY rose notably after Turkey’s government call for snap election in June (from November 2019) (see) while RUB also was one of the winners this week as it recovered some ground after last week’s sharp depreciation

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Update 16.30 CET 20 April

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