Markets rallied into the weekend, as has been the case, in recent times. Positive news from the Middle East, in terms of a looming peace deal, allowed oil prices to ease to US$95/b. Bond yields also softened, while equities rallied strongly, into the market close. The US Dollar was steady, with the EUR holding above 1.1600, while the GBP traded around 1.3450. The strength of the GBP and the easing of Gilt yields, was a surprise, as the April fiscal deficit surged. Government deficit spending is on the verge of disaster and bond yields have been reflecting this. There are warning signals flashing, combined with the Political crises, it becomes an existential problem to the UK.Commodity currencies eased into the weeks close, with the AUD trading below 0.7175, while the NZD attempts to hold above 0.5850. This coming week is important for both currencies, as there is an important read on Australian CPI inflation and the RBNZ release their latest interest rate decision.
