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MARKET INSIGHT
  • The Asian session has seen risk aversion dominate - largely driven by increasing numbers of Covid-19 cases in parts of China's "dynamic zero-COVID" response, which is now seeing increasing worries of a wider lockdown as cases start to rise in districts around Beijing and Shanghai. However, going into early European trading core fixed income is off its highs, possibly helped by Macron's victory in the French election. This was largely priced by markets, but the result still removes a tail-risk for financial markets (French spreads have narrowed a little on the open).
  • Looking ahead, there is little on today's calendar outside of Spanish PPI at 8:00BST, the German IFO at 9:00BST and a speech by ECB's Panetta at 18:00BST. Ahead of next week's Fed/BOE meetings there are no speeches scheduled this week from significant policymakers.
  • For the first half of the week there is little on the calendar other than US durable goods that will have significant market-moving potential. However, the second half of the week sees national CPI prints across the Eurozone start to be released with US PCE, personal income / spending and the MNI Chicago Business Barometer all set for release.
  • Through the first half of the week, markets are therefore likely to remain in somewhat of a holding pattern, with the Covid response in China and any developments due to the Ukraine war likely the driving factors.

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