Sorting out the economy

Today's news headlines: 

‘Sunak should break vow and raise UK taxes, ex-chancellors say’. The UK’s Chancellor of the Exchequer, Rishi Sunak, should break from his Conservative party’s election promise not to raise the country’s main rates of tax, according to former chancellors Norman Lamont and Ken Clarke. The UK is currently stuck in its third lockdown to prevent the spread of coronavirus and Sunak is scheduled to publish his latest budget on March 3rd, with his priority on protecting jobs. Sunak has previously spoken of his ‘sacred’ duty to get the country’s finances in order, which means an eventual rise in taxes or cuts in spending. Analysts have warned that enacting these measures too quickly would risk choking off the recovery, but Clarke said he would implement some small tax increases now, whilst Lamont commented that Sunak should use the budget to announce plans for future tax increases. (Bloomberg)

‘Joe Biden promises stimulus will bring US economy ‘roaring back’’. President Biden told Americans in Milwaukee and Wisconsin that the US economy would come ‘roaring back’ if Congress approves the $1.9tn fiscal stimulus plan currently on the table. The President promised Covid-19 vaccines to all those who wanted one by the end of July and expressed his belief that the US economy could bounce back in the next six-months to a year. Biden barely touched on foreign policy but did manage to take a swipe at China over its human rights record. (Financial Times)

Today's events, rates, and data 

  • Sterling softened below the 1.39 handle against the US Dollar overnight but continued its march towards the 1.15 level against the Euro. Market risk sentiment remains good although it could be tested, as Treasury yields hold near their highest in a year, with investors assessing the impact of a global selloff in government debt.

Today's events

UK CPI: 0.7% vs 0.6% previously
Canada CPI: 1.30pm
US Retail and Core Retail Sales: 1.30pm
FOMC Member Barkin Speaks: 2.00pm
MPC Member Ramsden Speaks: 4.00pm
FOMC Meeting Minutes: 7.00pm

Interbank rates

GBP/USD: 1.3880
GBP/EUR: 1.1495
EUR/USD: 1.2075
USD/CAD: 1.2715