Bond market in focus as Fed heads towards tightening

•     Bond market in focus as Fed heads towards tightening

–    NY Fed President Dudley says Fed rate hike would be “regime shift”

–    SF Fed President Williams says first hike could come as early as June

–    Yields soar globally, then return to where they were

–    Fed tightening should have biggest impact for US yields, therefore support USD

•     ECB continues aid for Greece

–    Votes to raise ELA funds by €1.1bn, keep haircut unchanged; Apparently a reward (or absence of penalty) for progress on talks

–    Talks are not yet complete, so this isn’t the end of the story

•     Today:

–    Eurozone: Preliminary Q1 GDP figures for France, Germany & Eurozone overall. Eurozone expected to show small acceleration in growth.

–    UK:  BoE Gov. Carney presents quarterly Inflation Report, along with updates of economic forecasts. Repeat of 2% inflation forecast could support GBP. Indicators:  UK unemployment for March forecast to decline, also GBP-supportive.

–    US: Retail sales for April forecast to have accelerated; could confirm that weakness in Q1 was mainly due to bad weather, which would be USD-positive