Bond Rally Built on Inflation Euphoria Faces UK Reality Check

-- A global bond rally ignited by signs that inflation in the world’s largest economy is finally slowing once again faces a reality check this week.Gantz Says He’ll Quit Unless Netanyahu Moves to New War PlanGovernment debt from around the world is enjoying its best month of the year after a gauge of price pressures in the US last week ebbed for the first time in six months.

But a hotter-than-expected figure could lead traders to dismantle recent bets on a rate cut from the BOE as soon as June — and call into question whether investors around the world have gotten ahead of themselves.“The crucial takeaway will be the evolution of inflation beyond the spring. Core and services inflation for April are expected to stay sticky at higher levels, so the head room for the BOE to cut interest rates is minimal.

“It is too soon to be long UK gilts at the current juncture because services inflation remains much too sticky,” said Chester Ntonifor, a strategist at BCA Research.In the US, key data includes S&P Global US manufacturing, services and composite PMIs, jobless claims , durable goods orders, University of Michigan sentiment ,

In the euro area, flash PMI survey for May will give an insight into how growth is developing in the second quarter

Source: Financial Digest (financialdigest.net)

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