Dear Reader,

Today's overview of economic news and market action

• Investor sentiment held  positive tone for much of yesterday …
• On bond markets, UK Gilt yields declined by 6-12bps as UK market rate expectations softened …
• The softening in UK rates weighed somewhat on sterling …
• This sees EUR/GBP open today just above 86p …
• GBP/USD is just below the $1.25 threshold …
• Elsewhere, EUR/USD is at the midpoint of $1.07-1.08 …
• The macro schedule for today is quite sparse …

Not Fed Up with Higher Rates Yet

We are in the midst of the April-May round of central bank meetings. This past week saw the US Federal Reserve gathering 
take centre stage. To no great surprise, the central bank left its key funds rate in a target range of 5.25%-5.50%, a 22-year high. 

The latest AIB PMI® survey data indicated a further rise in Irish service sector output in April, but the rate of growth was the slowest since January. New business growth also eased since March, contributing to a softer rate of job creation. 

ECB signals June rate cut on the cards

As widely anticipated, the ECB’s Governing Council meeting for April saw the central bank maintain its key deposit rate at 4%. It marked the fifth consecutive policy meeting that the ECB has kept rates unchanged. There was “consensus” rather than unanimity within the Governing Council on the decision.

PMI fell to 49.6 in Mar. The slight decline reflected a fall in new business and output and a sharp drop in sentiment. Meantime, inflationary pressures in the sector continued to build

Steepest fall in new orders since December 2022

AIB Ireland Manufacturing PMI® data signalled a sustained reduction in output volumes and incoming new work during April, with both rates of decline accelerating since the previous survey period. Total new business decreased to the greatest extent for 16 months, in part reflecting a sharp fall in export sales.