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Give and take

Today's news headlines: 

‘Fed warns ailing China real estate sector poses risks to US economy’. According to the Federal Reserve, with China’s wide-reaching economy and extensive trade links with the rest of the world, the current instability in the real estate sector is posing some risks to the US economy. The broader impact of greater levels of defaults could have more widespread consequences. Tightening of financial conditions through rising yields and a deterioration in risk sentiment all have the potential to push up debt servicing costs if these highly leveraged companies continue to falter. (Financial Times)

‘Inflation surge delivers negative real interest rates for leading economies’. As inflation rates continue to surge throughout the globe, developed nations have been left with their lowest real levels of inflation in decades. Real rates in the US stand at around -5.3% and -3.0% in the UK. The last time advanced economies were at this level was during the 1970s, with real rates also slumping during the 2008 financial crisis. Credit growth should be supported as a result with lower rates making the cost of debt more sustainable, helping to keep financing conditions stable. (Financial Times)


Stocks closed relatively flat yesterday, with the S&P 500 gaining 0.09% and the Euro Stoxx 600 nudging 0.04% higher. The US 10-year bond yield has taken a breather from its pullback last week, holding around 1.49% this morning. Cable has bounced from its post-Federal Reserve lows trading at $1.3575 while EUR/USD continues to struggle to find direction around $1.16.


UK BRC Retail Sales Monitor y/y: -0.2% vs -0.6% last month
Eurozone ZEW Economic Sentiment: 10:00AM
German ZEW Economic Sentiment: 10:00AM
ECB President Christine Lagarde speaks: 1:00PM
US PPI and Core PPI m/m: 1:30PM
Federal Reserve Chairman Jerome Powell speaks: 2:00PM
MPC member Ben Broadbent speaks: 3:30PM
BOE Governor Andrew Bailey speaks: 4:00PM
BOC Governor Tiff Macklem speaks: 10:45PM

Interbank rates:

GBP/USD – 1.3567
GBP/EUR – 1.1706
EUR/USD – 1.1589
USD/CAD – 1.2436

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