httpvh://www.youtube.com/watch?v=RhjjWkJeP_o

The economic debate was pants. Awful. This debate should have been the most exciting as it deals with the issue that most voters put as their number one concern. Unfortunately we didn’t get much from any of them as they all tried to not drop a clanger. Cameron was the most convincing on the economy however, Clegg was lightweight and Brown was just depressing. Not a single addressed the deficit; a policy that when in power would lead to Greek like sorrow for the UK. But it’ll all be over soon.

Preliminary polls taken after the final Prime Ministerial debate have largely seen Cameron keep/extend his lead with Clegg in 2nd and Brown in a fairly dismal 3rd.

Sterling had a good day against most currencies as the prospects of a hung parliament receded. We were yet again unable to break any new highs against the euro which is in keeping with our belief that we have seen sterling capped before the election.

European, and particularly Greek assets, staged a relief rally yesterday as reports that a EUR120bn rescue package was being prepped for deployment within days. The Greek stock market gained 7% with banking shares bid heavily throughout the day. The yield on Greek debt continued to stay at eye-wateringly high levels however and will need to come down further if any market fundraising of debt is needed. Other countries that have been caught up in this sovereign debt issue (Portugal, Spain) saw their yields decrease slightly as well yesterday.

Any implementation of a rescue package will come tied to tough austerity measures as Greece has a record of implementing fiscal reform poorly. The FT is reporting that a public sector pay freeze for 3 years and an increase in VAT has already been agreed on and that further brokering will take place over the course of the weekend. This is good news in the short term and we should see the euro and other risky assets swell as a result.

Overnight GBP has managed to shrug off the impact of a slightly poor GFK consumer confidence measure (-16 vs. -15 exp) and is trading in the high 1.15s against the euro and the mid 1.53s against the US dollar. Data today comes in the form of EU CPI and Unemployment at 10am with the main focus on US GDP at 13.30. Expectations are for a gain of 3.3%