Financial Markets Review by Lloyds TSB

The pound produced a mid-table performance, falling against commodity currencies and rallying against the low yielding currencies

Bond yields rise on surprise fall in US unemployment rate

The pound produced a mid-table performance, falling against commodity currencies and rallying against the low yielding currencies

The Japanese yen was the weakest of the G-10 currencies this week as the prime minister warned that yen strength cannot be “left as it is”

The move higher in equity and commodity prices, over the weak, left the USD dipping lower against emerging market currencies

The ECB left eurozone interest rates unchanged. However in the following press conference President Trichet announced that the 12-month and 6-month tenders were coming to an end – this is another step in the ECB’s exit strategy.

Much better than expected US employment data and the ECB announcement that it will start reducing excess liquidity took a heavy toll on government bonds this week. UK 5y swaps dropped below 3% but in the end finished the week 8bps higher at 3.12%.

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