Act big

Today’s news headlines:

‘Janet Yellen to tell confirmation hearing that US should ‘act big’’. Later today, former Fed Chair Janet Yellen will lay out the case for the incoming President’s proposed $1.9tn Covid-19 relief package. Yellen will be speaking at her confirmation hearing as new Treasury secretary and is expected to say that the US risks ‘a longer, more painful recession’ and ‘long-term scarring’ if the incoming administration does not inject more funding into the economy. The package would add to previous stimulus of $900bn and $3tn. Yellen is predicted to downplay the impact on the US budget deficit in a historically low-rate environment. (Financial Times)

‘Tripling of China-Europe shipping costs threatens goods supply’. Ongoing disruption from the global pandemic has manifested in rising shipping costs of goods from China to Europe, as empty containers are in short supply. The consideration for importers is whether to stump up increased costs now and pass those on to customers or whether to wait and risk stock levels falling to zero. The delays are beginning to affect global supply chains, warned the Chief Economist at Capital Economics, who indicated that the pressure is expected to ‘intensify before it eases’. (Financial Times)

Today's events, rates, and data 

  • Risk appetite began to return to markets overnight, beginning in Asia as the Hang Seng touched heights not seen since June 2019. Both UK and US equity index futures are positive heading into this morning, whilst US 10-Year Treasuries continue to be sold. The US Dollar Index has softened from its recent bounce, allowing Sterling to climb almost back to the 1.36 interbank handle and the Euro to solidify back above the 1.21 level.

Today's events

German ZEW Economic Sentiment: 10.00am
ZEW Economic Sentiment: 10.00am
Treasury Secretary Yellen Senate Confirmation Hearing: 3.00pm
BoE Member Haldane Speech: 6.00pm

Interbank rates

GBP/USD: 1.3595
GBP/EUR: 1.1220
EUR/USD: 1.2115
USD/CAD: 1.2730