Proceed with caution

Today's news headlines: 

‘China targets 6% GDP growth after reining in coronavirus’. China kicked off its National People’s Congress today, with Premier Li Keqiang hailing the country’s recovery from an ‘extraordinary year’. The world’s second-largest economy will target growth of 6.0% this year, with economists calling it a relatively modest target compared with recent years. Beijing is wary of rising debt levels, which happened after the 2008-2009 Global Financial Crisis, with the nation’s debt-to-GDP ratio rising sharply to 270% last year. Li added that the government wants to create 11m urban jobs and trim the budget deficit to 3.2% of GDP. (Financial Times)

‘Powell inflation comments send US stocks and bonds lower’. Federal Reserve Chairman, Jerome Powell, did little to help the recent sell-off in long-term US government debt and equities as he vowed to keep monetary policy steady even in the event of rising inflation. Powell cited labour market weakness in his argument for keeping a patient but accommodative stance on supporting the economy—raising the importance of today’s Non-Farm Payrolls release. Market participants fear that the Fed is reacting too slowly to a rise in inflation expectations and long-term Treasury yields, but Powell and his colleagues have stated that they have the tools at their disposal to deal with an unhealthy inflationary spike. (Financial Times)

Today's events, rates, and data 

  • Stocks and equity index futures were broadly lower across the board overnight, with the S&P 500 having given up almost all its gains for 2021. The US Dollar moved higher on the moderate risk-off tone, with benchmark Treasury yields continuing their march upwards.

Today's events

German Factory Orders: 1.4% vs -2.2% previously
US Average Hourly Earnings: 1.30pm
US Non-Farm Employment Change: 1.30pm
US Unemployment Rate: 1.30pm
MPC member Johnathan Haskel Speaks: 2.00pm
Canada Ivey PMI: 3.00pm

Interbank rates

GBP/USD: 1.3870
GBP/EUR: 1.1605
EUR/USD: 1.1950
USD/CAD: 1.2660