Last week saw a decline in core bonds daily, with US yields gaining between 17.6 and 27.9 basis points. German rates also rose by 14.7 to 19.1 basis points. Despite this, Friday’s movements were relatively small, indicating some fatigue ahead of critical events this week. These include several central bank meetings, with the Federal Reserve being the highlight. The recent rate rally encountered resistance near February’s year-to-date highs, leading to some profit-taking, especially with real yields rising and stock markets near record levels.

Wall Street experienced a 1% decline on Friday, particularly affecting the Nasdaq. European equities also ended slightly lower after volatile trading. On Thursday, the dollar saw some strength against the euro but remained close to 1.09. USD/JPY saw a notable jump following wage negotiation results, reaching 149.04. Oil prices stabilized above $85 per barrel, while copper prices surged to their highest level since April last year, suggesting a possible shift in sentiment regarding global growth.

This week, central bank meetings dominate, starting with Japan and Australia. The Federal Reserve’s meeting on Wednesday will be closely watched, especially regarding inflation, economic resilience, and interest rate forecasts. The Czech Republic also has a meeting on Wednesday, coinciding with the ECB and Its Watchers conference in Frankfurt. Thursday features meetings from the Bank of England, Norges Bank, and the Swiss National Bank, alongside the release of March PMI data.

In other news, Moody’s upgraded Spain’s outlook from stable to positive, citing a more balanced growth model. UK Rightmove house prices rose by 1.5% month-on-month in March, strengthening the housing market.

With so much event risk ahead, markets may remain cautious, with trading expected to be technically insignificant in both core bond and currency markets today.

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