Growth worries
16 May 2022As far as the European Central bank is concerned, there’s a real risk that Euro weakness will become a significant driver of imported inflation. Bank of France Governor Francois Villeroy de Galhau commented that policymakers are watching the foreign exchange market, wary that a Euro that's too weak would go against price stability objectives...
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Germany to ban Russian oil without EU
16 May 2022Germany plans to stop importing Russian oil even if the European Union fails to agree a bloc-wide ban in its next set of sanctions. EU ministers will meet to discuss the next set of sanctions against Russia after Hungary previously objected to an EU ban on Russian oil imports...
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Powell reaffirms Fed’s hawkish stance
13 May 2022Federal Reserve Chair Jerome Powell repeated claims during a radio interview that the central bank is likely to raise interest rates by 50 basis points in June and July if the economy performs as expected. While a 75-basis point hike remains a move that the Fed aren’t ‘actively considering’...
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UK economy contracts in March
12 May 2022The Office for National Statistics published the latest Gross Domestic Product data for the UK this morning, showing a 0.1% contraction in March. This comes amid a pullback in consumer sentiment as soaring inflation puts pressure on disposable incomes. UK Chancellor Rishi Sunak has attributed this slowdown to the war in Ukraine, which has ‘disrupted’ the UK’s recovery trajectory out of the...
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Euro set to fall further
11 May 2022Although Russian forces have been pushed back from Ukraine’s capital of Kyiv, many military strategists believe Vladimir Putin is formulating plans to retake the region. The consolidation of conflict in the Donbas region could lead to an escalation in the coming months if there’s a chance that Putin...
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Balance begins to shift
10 May 2022Momentum appears to be building for Ukraine on the 76th day of the Russia-Ukraine conflict. Ukraine’s Foreign Minister, Dmytro Kuleba, has emphasised the need for a steady supply of weaponry from the west to sustain efforts to recapture parts of the Donbas region and eventually Crimea...
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Tough times ahead
09 May 2022With US Dollar dominance tearing through markets, negative momentum for the Pound looks set to continue into this week and perhaps beyond as risks to the UK’s economy mount. Despite having lost as much as 10.5% against the Greenback since the start of the year, Sterling looks vulnerable to further downside moves following last week’s dovish Bank of England rate hike...
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US Dollar pushes new highs on worsening global outlook
09 May 2022The US Dollar made fresh multi-year highs on a trade-weighted index this morning as Chinese lockdowns, rising inflation, and a worsening global economic outlook boosted demand for the safe-haven currency. Friday’s strong Non-Farm Payroll data pushed Treasury yields higher, further boosting the attractiveness...
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Peer pressure builds for ECB
06 May 2022Policy divergence has become more apparent in recent days after the Federal Reserve hiked interest rates by 50 basis points, the Bank of England made its fourth consecutive rate hike, Australia hiked rates by more than expected, and Sweden’s Riksbank made a u-turn and decided to hike rates as well...
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Fed committed to fighting inflation
05 May 2022The Federal Reserve met market expectations last night by raising interest rates by 50 basis points and suggested similar hikes are on the table for June and July. Fed Chair Jerome Powell assured Americans that the central bank is committed to curbing inflation, even at the risk of causing ‘some pain’ to economic growth...
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Russian goals shift
04 May 2022Russian President Vladimir Putin’s focus has turned to cementing control in Ukrainian regions that Russia has taken in the 10-weeks since its invasion of the country began. According to people reportedly involved in the Kremlin’s plan, locals will be ordered to use Rubles for transactions, and referendums will...
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Rising funding costs
03 May 2022It’s been 20 years since the US Dollar Index hit the heights of 103.93 as markets turn ultra-hawkish on the Federal Reserve’s current monetary policy path. Such a hawkish rhetoric has sent the Japanese Yen tumbling over the last year with USD/JPY up nearly 20% as the Bank of Japan continues to brush off its dovish policy stance...
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Windfall tax on UK energy industry
03 May 2022The UK’s opposition parties have called for the Government to impose a windfall tax—a one-off tax on companies who experience above-average profits for reasons beyond control—in order to help households with the cost-of-living crisis. Having previously rejected the idea, Chancellor Rishi Sunak said...
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US prepares $33bn package for Ukraine
29 Apr 2022The US looks likely to ramp up its support for Ukraine yet again, with President Joe Biden seeking $33bn from Congress as the Russia-Ukraine conflict continues into its 64th day. Biden has emphasised the US will support Ukraine financially for as long as the war continues, with...
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Johnson raises risk of trade war
28 Apr 2022Boris Johnson has been drawing up legislation which would give ministers the power to tear up the post-Brexit trade deal regarding the Northern Ireland protocol. Johnson’s tough new stance has alarmed the Treasury, where officials worry it could worsen the cost-of-living crisis and begin a trade war with the EU...
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Growth concerns dominate sentiment
27 Apr 2022US markets sank to their lowest levels for six weeks as a slew of corporate earnings misses compounded fears of a slowing global economy. The US Dollar Index has bounced 25 basis points this morning as investors continue to pour into the safe-haven asset. WTI crude oil is trading at $102 per barrel in early trade...
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Demand starts to waver
26 Apr 2022Chinese property companies are scaling back in Hong Kong as the effects of the Evergrande default continue to create liquidity concerns. Demand for premium office space is also dwindling, with rents expected to fall by around 5% this year. Mainland-Chinese firms account for a large portion of property demand in Hong Kong...
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Dark clouds gathering
25 Apr 2022It’s a sea of red out there. Futures in this morning’s session pointed towards further weakness, while the ramping up of rate expectations has likely only made the bond rout steeper. Commodity price gains also suggest most consumers are in for more cost-of-living pain in the near future, but equities declines aren’t the cause, they’re a symptom of a decline in disposable incomes...
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China’s gloomy economic outlook
25 Apr 2022Global equities and commodities tumbled this morning, as China’s worsening Covid outbreak stoked fears of a stricter lockdown and slower economic growth in the world’s second-largest economy. Sovereign bond yields slid while the US Dollar climbed on...
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Fed eyes 50 basis-point hike
22 Apr 2022A 50 basis-point interest rate hike by the Federal Reserve is looking increasingly likely for the May meeting. On a panel with the International Monetary Fund (IMF) yesterday, Fed Chairman Jerome Powell suggested that a half-point rise will be a serious consideration as the central bank attempts to restore price stability...
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ECB official points to July monetary tightening
21 Apr 2022European Central Bank Vice President, Luis de Guindos, believes policymakers will be able to stop asset purchases and possibly hike interest rates in July. He explained the decision will hinge on the central bank’s next economic forecasts released in June while discounting the risk of recession and stagflation in the Eurozone...
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Slower growth to come
20 Apr 2022The UK economy is expected to grow just 1.2% in 2023, according to the International Monetary Fund (IMF), which will be the slowest growth rate in the G7. The lower projected growth rates can be attributed to the stronger rebound from the pandemic, with the UK growing the fastest in 2021...
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A change of perspective
19 Apr 2022While the Federal Reserve and Bank of England are determined to tighten monetary policy in the face of inflation, not all central bankers are willing to be that single-minded in their pursuit of price stability. Last week’s European Central Bank meeting left observers less impressed with its eagerness to act. We’ve highlighted that raising rates will likely only meaningfully...
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Chinese economy under pressure
19 Apr 2022With Coronavirus cases rising and lockdowns sweeping throughout China, the People’s Bank of China has pursued supportive measures. The central bank has cut reserve requirements for banks while encouraging institutions to support infrastructure projects. Growth forecasts are falling across the board for the second quarter in China, with Goldman Sachs expecting financial support to continue as the country continues on the zero-Covid policy path...
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Waiting game
14 Apr 2022The US has supplied an additional $800m in military support to Ukraine as Russian forces regroup following the resistance faced in Kyiv. US President Joe Biden has stepped up the pressure on Vladimir Putin in the media, accusing the Russian President of genocide. According to NATO, western countries have recently become more willing to send offensive weaponry to Kyiv as talks around potentially providing fighter jets continue...
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Price pressures persist
13 Apr 2022Ukraine’s Finance Minister, Sergii Marchenko, has appealed for tens of billions of dollars to fill the fiscal deficit caused by the war. The deficit grew to $2.7bn in March, and Ukraine expects this to grow up to $7bn by May. Ukraine has received significant military aid from Western countries so far, but it also wants financial aid and emergency lending from the IMF and The UK Consumer Price Index rose 7.0% year-over-year in March, driven by a 28.3% jump in gas prices as real incomes look...
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Ukraine appeals for financial aid
12 Apr 2022Ukraine’s Finance Minister, Sergii Marchenko, has appealed for tens of billions of dollars to fill the fiscal deficit caused by the war. The deficit grew to $2.7bn in March, and Ukraine expects this to grow up to $7bn by May. Ukraine has received significant military aid from Western countries so far, but it also wants financial aid and emergency lending from the IMF and World Bank...
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Rate expectations continue to build
11 Apr 2022The European Central Bank is also signalling that it intends to normalise policy over the course of this year and will hold its next press conference on Thursday. Bloomberg estimates that the ECB’s policy rate will be back in positive territory by the end of the year...
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Narrow lead for Macron
11 Apr 2022President Emmanuel Macron will face rival Marine Le Pen in the final round of the French election, holding a narrow lead in the polls ahead of the runoff on the 24th of April. ‘The debate we’ll have in the next two weeks will be decisive for our country and for Europe’ Macron said. The incumbent President has portrayed himself as a safe pair of hands in...
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Russia suspended from UN Human Rights Council
08 Apr 2022Following Russia’s withdrawal from Kyiv, it’s thought that it’s re-grouping and re-arming ready for a second offensive on Ukraine’s capital. Nato has offered support to Ukraine by providing more defensive weaponry...
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Lockdowns in China threaten recovery
07 Apr 2022Coronavirus cases continue to rise in mainland China as President Xi Jinping’s zero-Covid policy looks to threaten the country’s economic recovery. Logistics are facing huge pressure throughout the country, with drivers subject to much stricter testing and flights into Shanghai’s Pudong airport cut to 3% of activity from just a month ago. Around 200 million people are estimated...
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Balance sheet tapering to commence
06 Apr 2022Lael Brainard, the Federal Reserve’s next vice chair, has stated that tapering of the central bank's $9tn balance sheet will begin as soon as May. Support is now building among policymakers for more aggressive hawkish policy action to keep a lid on inflation. The latest Fed minutes from the March meeting will be released today, and Chairman Jerome...
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Western leaders contemplate more sanctions
05 Apr 2022The pressure on Russia is building again as talks of fresh sanctions hot up amid reports of civilian killings in the city of Bucha, just 25km away from the capital of Kyiv. The US is likely to prevent the payment of Russian bonds through US banks. Talks of a Russian natural gas embargo are also ongoing, but the negative impact on Germany, which doesn’t have a...
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Time will tell
04 Apr 2022Since June of last year, the Greenback’s valuation has been one-way traffic, with the US Dollar’s trade-weighted index climbing by almost 7% in the period. Of course, global events like the Covid-19 pandemic and, more recently, Russia’s invasion of Ukraine have helped to support demand for the safe-haven US Dollar. However, market expectations of Federal Reserve policy action have...
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Fresh war crime sanctions
04 Apr 2022European governments are pushing for the European Union to quickly impose new sanctions against Russia following reports of unarmed Ukrainian civilians being killed by Russian troops. New measures that focussed on strengthening existing sanctions were already being finalised...
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Feeling the pinch
01 Apr 2022The Office for Budget Responsibility expects real incomes to drop at their fastest pace since the 1950s, as saving rates in the UK fall while people attempt to maintain the same standard of living. As costs begin to mount, it may be unsurprising to see a tightening in consumer spending in the coming months, heightening recession risk...
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Biden combats inflation
31 Mar 2022Germany has frozen $106m related to sanctioned Russian individuals, significantly less than other European nations. Deputy Finance Minister Toncar stated ‘the focus is on ensuring existing instruments are effective… also to identify who may be circumventing and how’. In comparison, Italy and France have frozen 780m and 850m euros, respectively while Switzerland, a Russian wealth haven, has frozen $6bn in assets...
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Russia rolls back presence in Kyiv
30 Mar 2022Asian markets continued their rally overnight amid continued peace talks between Russia and Ukraine. European markets have opened mixed this morning as traders attempt to determine the outcome of the negotiations. Oil prices have advanced in early trading while the US Dollar Index has fallen 30 basis points...
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Greater hope for resolution
29 Mar 2022As the cost of living crisis continues to deepen, Bank of England Governor Andrew Bailey has warned that the worst is yet to come, and price shocks this year will be worse than any period during the 1970s. Inflation is forecast to surge to 8% in the second quarter of the year as real incomes and spending are set to be squeezed...
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Defying gravity
28 Mar 2022Over the past several weeks, central banks have strived to bridge the rate-expectation gap with markets that anticipated much higher rates over the next year to combat inflation. The impact is that US Treasuries (since the Federal Reserve tends to lead monetary policy changes) are getting trounced and the yield curve continues to move higher...
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