Today's news headlines:

‘UK government borrows more than expected as debt payments surge’. UK public sector borrowing rose to £14bn in May as a 70% surge in interest payments pushed debt levels higher. UK Chancellor Rishi Sunak has highlighted the difficulty rising rates could have on the public purse. The Office for Budget Responsibility expects borrowing to rise to £19.7bn in June. The government is facing pressure, with sustained calls for more support for families amid surging inflation. Continued rail strikes this week are creating more unease that debt levels could keep climbing. (Bloomberg)

‘BofA to UBS see European stocks rallying after tough first half’. Strategists are optimistic about the outlook for European equities despite them hitting lows not seen since February 2021. According to a Bloomberg poll, analysts see 14% upside in the Stoxx Europe 600 Index by the end of the year, with the index down almost 18% year to date. However, persistent inflation and rising rates are expected to lead to a fall in demand in the coming months. Despite this, some still see value in Europe relative to the US. (Bloomberg)

Today

Asian shares regained some ground overnight while European and US equity futures slid following Federal Reserve Chairman Jerome Powell’s comments on recession risks. Sovereign yields have fallen overnight while oil continues its descent lower, with Brent trading below $110 per barrel this morning.

Events

German flash Manufacturing Purchasing Managers’ Index (June): 52.0 (est. 54.0)
German flash Services PMI (June): 52.4 (est. 54.5)
UK flash Manufacturing PMI: 9:30AM
UK flash Services PMI: 9:30AM
US Unemployment Claims: 1:30PM
US flash Manufacturing PMI: 2:45PM
US flash Services PMI: 2:45PM
US Federal Reserve Chairman Jerome Powell testifies: 3:00PM​​​​​​​

Interbank rates:
​​​​​​​
​​​​​​​GBP/USD – 1.2193
GBP/EUR – 1.1599
EUR/USD – 1.0512
USD/CAD – 1.2982

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