Markets are starting to look a tad soft as the FTSE rejects, once again, the highs of the recent trading period. 5800/30 is looking to be more and more a bridge too far for the time being and with the election just a couple of weeks away, investors seem content to play it safe.

Greek debt has almost become a tragedy, with two-year yields hitting almost 12pc yesterday, with 10-year around 9pc. The inversion looks perverse, until you realise that this is pricing in the possibility of a write-down of some of the debt, with bond buyers being asked to take perhaps 70 to 80 cents in the euro. On 2yr money this would have a much bigger overall impact than on 10yr.

Banking stocks continue to be the darling of the markets, but this may be a last-gasp rally as the regulatory environment over in the US is likely to become increasingly burdensome. Populist measures from politicians (who should know better) risk restricting banks to becoming quasi-building societies. This sounds all very well to the ill-informed, until you realise the limiting impact this would have on their lending capabilities. Businesses are complaining at the moment at the reluctance of banks to lend. If the full remit of all the draft legislation being put forward across Europe actually comes into being, your chances of borrowing money for a mortgage or new business will become extreme indeed.

The FTSE is opening down some 30 points, giving up much of yesterday’s rally. Our clients never really believed in the move higher and have been selling heavily all morning (and much of yesterday’s session as well!). There is some minor support at 5720, but the bears will be focusing on the much more important 5650/65 area. It is difficult to see a concerted attempt at this level until after the election and in any case, the other world markets are hardly indicating such weakness. If you discount a small bit of intra-day activity, the FTSE has traded between 5700 and 5800 for most of April, rather similar to March, which spent the majority of the month between 5600 and 5700. Trading ranges are becoming ever more constrained for the UK’s senior index and volatility continues to drift lower.

Currency markets are also very much constrained, with the same ranges for most of the crosses being traded again and again. The Pound has run up against 1.55 once more, and once more has failed to break higher. This makes it the forth time this month that the level has proved too much for buyers to contemplate. On the other hand, the periodic pull-backs have been getting weaker and weaker as well, with sellers similarly unable to gain much of a footprint. Until we break above 1.5500 and hold it to a close or below the rising trend line currently at 1.5320, clients will continue to trade the tightening range.

Gold failed at 1160/62 again yesterday (this comment seems to have a central thread!) and has drifted back to the mid/low 1150’s. With uncertainty over many areas now reaching fever point, there is a reasonable chance that Gold will become the flavour of the month once more (no matter this commentator’s personal opinion about the yellow metal!). Traders will be watching the aforementioned 1160/62 level like hawks for a bullish signal, and on the downside the old supports at 1140/42 and 1122/24 remain paramount.

As feared in yesterday’s comment, the spread between Brent and Nymex has widened dramatically and we are now nudging an all time high of plus 300 cents. Spread traders are being squeezed and we must watch out for a blow out moment, which (if it occurs) could well spike the Crack spread towards 400 or even 500 cents.