Today's news headlines: 

‘Johnson Hints at Future Tax Cut as Burden on U.K. Business Rises’. The UK Prime Minister discussed his tax stance in an interview with Bloomberg, stating that both he and Rishi Sunak are ‘low-tax conservatives’ who believe in an enterprise economy. The evidence, however, points to the contrary, as Johnson’s government is set to raise the burden on the UK taxpayer to 35% of national income—the highest since 1955. The chancellor is due to deliver a budget and three-year spending review on October 27^th, with levies on health and social care due to begin in April. By getting tax hikes out of the way now, the conservatives can reduce the fiscal burden in the run-up to the next general election, likely to be called in 2023. (Bloomberg)

‘Supply-Crunch Inflation Gives Central Banks an Unfixable Problem’. Central bankers face a difficult task in dealing with surging consumer prices as economies recover from post-covid restrictions. Their dilemma stems from not knowing how much of the inflation is driven by a resurgence in demand and how much is being caused by bottlenecks in supply created by log-jammed ports and shortages of workers and materials. Raising rates would temper consumer demand but won't tackle the supply story and could mean policy becomes too tight if supply issues subside. Markets are betting on the Bank of England to raise rates to 0.5% by year-end, putting policy on par with recent hikes in Norway and New Zealand. (Bloomberg)

Today

The trade-weighted US Dollar Index fell overnight, while Asian stocks, alongside US and European equity futures, rose amid prospects for good corporate earnings. Markets are taking comfort in earnings results but are still grappling with the prospect of tighter monetary policy and the effect it may have on price pressures.

Events

Monetary Policy Committee member Mann speaks: 11:00AM
Bank of England Governor Bailey speaks: 1:05PM
Federal Open Market Committee member Bowman speaks: 6:15PM
FOMC member Bostic speaks: 7:50PM
FOMC member Waller speaks: 8:00PM

Interbank rates:

GBP/USD - 1.3773
GBP/EUR - 1.1822
EUR/USD - 1.1651
USD/CAD - 1.2328

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