The irony

Today’s news headlines:

‘Government to spend £200m on helping GB goods flow to N Ireland’. The government is expected to spend £200m on new services to help Northern Irish businesses cope with the bureaucratic cost of doing business with Great Britain. But that’s not the entirety of the spending; another £155m is going towards digital technology to smooth the UK border (something experts said wasn’t feasible) and £300m to support peace, prosperity, and reconciliation. (Financial Times)

‘Investors fear negative real yields are driving the "everything rally"'. Interest rate markets are predicting that central bankers simply won’t be able to stimulate demand as a result of the Coronavirus. Most recently, this has manifested in falling treasury security yields into negative territory. Once one factors in inflations, an investment in ‘safe assets’ means taking substantial loses. The flip side of that coin means virtually anything else is a relatively attractive prospect. (Financial Times)

Today's events, rates, and data 

  • Overnight Donald Trump stepped up measures against TikTok and WeChat, by giving companies 45 days notice to stop doing business with them. The knock-on effect has been a broad decline in equities, oil, and gold. Today’s Non-Farm Payrolls is the key economic data point and will be closely watched because it indirectly impacts the amount of monetary policy support we might see out of the Federal Reserve in coming months. (See second article above for the link between inflation and asset prices).

Today's events

JP Average Cash Earnings y/y: -1.7% vs -2.3% last month
EU German Industrial Production m/m: 8.9% vs 7.4% last month
EU French Industrial Production m/m: 12.7% vs 19.9% last month
CA Employment Change: 1:30 PM
US Average Hourly Earnings: 1:30 PM
US Non-Farm Employment change: 1:30 PM

Interbank rates:

GBP/USD – 1.3110
GBP/EUR – 1.1065
EUR/USD – 1.1840
USD/CAD – 1.3340