Risk appetite returns

Solid growth in the US was received by stock markets. The S&P index climbed 0.6% last week. European stocks gained 2%. Earnings are supportive although disappointing releases have caused large corrections in technology. Valuation levels may be too high to accommodate downside EPS surprises.

The stock rise caused a modest increase in bond yields. The yield on 10 - year is close to 3%. Bunds trade near 0.45%, which contribute to shrinking credit spreads. Subordinated debt fared well as risk appetite returned. Gold is down some $30 since the start of the month. Inflation breakeven are unchanged.