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Clouds on the horizon

Today's news headlines: 

‘Gloomy U.K. Outlook Has Economists Clashing With Traders on BOE’. Recent soft data, twinned with soaring energy costs and supply-side bottlenecks, has caused analysts to become more pessimistic on UK growth prospects. In a Bloomberg survey published on Monday, the UK’s growth outlook was trimmed 0.4%—the sharpest reduction for any major European economy. Analysts now expect no change to the Bank of England key rate until May, with another hike coming in November. In financial markets, however, traders are predicting a first rate hike in December this year, with the headline rate reaching 1.0% by December 2022. (Bloomberg)

‘China Set for More Economic Pain as Property, Energy Crises Hit’. Beijing is not rushing to stimulate China’s economy despite growth in the country falling from 7.9% to 4.9% in the past quarter, suggesting growth could slow further in the coming months. There's a rising risk that the property contagion will keep spreading as Beijing slows its pace of lending to the real estate sector, which accounts for up to 25.0% of Gross Domestic Product when related industries are included. In addition to the property slowdown, a nationwide shortage of coal led to a fall in China’s electricity output, forcing factories in more than 20 provinces to curb output or shut completely. (Bloomberg)


Asian stocks fell overnight, along with US and UK index futures, as surging energy prices compounded fears over inflation, and growth in China slowed. Bond yields in Australia and New Zealand jumped after New Zealand’s inflation accelerated to the fastest pace in 10 years.


China GDP: 4.9% vs 7.9% previously
China Retail Sales: 4.4% vs 2.5% previously
China Industrial Production: 3.1% vs 5.3% previously
Federal Open Market Committee member Randal Quarles speaks: 10:30AM
US Industrial Production: 2:15PM
Bank of Canada Business Outlook Survey: 3:30PM
Monetary Policy Committee member Jon Cunliffe speaks: 3:30PM

Interbank rates:

GBP/USD - 1.3735
GBP/EUR - 1.1865
EUR/USD - 1.1575
USD/CAD - 1.2400

The markets are moving. To speak to our team, please call +44 (0)20 3465 8200.