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Hawkish tilt

Today's news headlines: 

‘US junk bonds hit by sharpest sell-off in over a year’. US high-yield debt suffered its worst fall in over a year in November as Omicron Coronavirus fears stoked investor panic. This move has highlighted the shift in sentiment as portfolios begin to rotate out of higher risk companies in favour of more defensive picks. Federal Reserve Chairman Jerome Powell’s comments yesterday only added fuel to the fire by suggesting the tapering of the $120bn bond-buying programme may speed up. (Financial Times)

‘UK shelves proposals to raise capital gains tax rates and cut allowance’. The Office of Tax Simplification (OTS) has been researching several Capital Gains Tax reforms over the last year on behalf of the government. Just a few years from another election campaign, it’s no surprise the Conservative party is looking at alterations that could potentially benefit and bring together their voter base. Changes to CGT for married couples and an alteration in the rules for companies using tax credits for research and development have been implemented so far. (Financial Times)


Markets continued their sell-off yesterday amid Jerome Powell’s comments suggesting inflation is no longer transitory; the S&P 500 fell 1.90%. Cable is trading back above the $1.33 handle after a 1.00% pullback following Powell’s comments. WTI bounced at $64.50 to trade back above the $68 level this morning.


Australia Gross Domestic Product q/q: -1.9% vs 0.7% previously
China Caixin Manufacturing Purchasing Managers’ Index: 49.9 vs 50.6 last month
UK Nationwide House Price Index m/m: 0.9% vs 0.7% last month
US ADP Non-Farm Employment Change: 1:15PM
Bank of England Governor Andrew Bailey speaks: 2:00PM
Federal Reserve Chairman Jerome Powell testifies: 3:00PM
US Institute for Supply Management Manufacturing PMI: 3:00PM
Treasury Secretary Janet Yellen speaks: 3:00PM

Interbank rates:

GBP/USD – 1.3308
GBP/EUR – 1.1734
EUR/USD – 1.1341
USD/CAD – 1.2758

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