UK economy contracts in March

Today's news headlines:

‘UK economy shrinks for first time this year’. The Office for National Statistics published the latest Gross Domestic Product data for the UK this morning, showing a 0.1% contraction in March. This comes amid a pullback in consumer sentiment as soaring inflation puts pressure on disposable incomes. UK Chancellor Rishi Sunak has attributed this slowdown to the war in Ukraine, which has ‘disrupted’ the UK’s recovery trajectory out of the pandemic. GDP growth in the first quarter of the year stands at 0.8%, which is ahead of France and Germany, but a slowdown is expected in the second half of the year. (Financial Times)

‘European corporate bonds hit by steepest sell-off in at least 20 years’. Corporate bonds continue to sell off amid inflationary fears, with the Euro Corporate Index down 10% in nine months as investors reassess asset allocations. Yields have climbed on high-rated debt as concerns about companies' ability to service the loans fall into question, causing required returns—the yield—to rise. European Central Bank President Christine Lagarde indicated that the central bank will aim to raise interest rates in July as financial conditions look set to tighten. (Financial Times)


Today

Asian markets followed US stocks lower overnight as an interest rate hike by the ECB begins to look more likely for the July meeting. Oil prices have fallen this morning, with WTI down over 2% in early trade. The US Dollar index has added another 30 basis points while European shares have opened in the red.

Events

UK Preliminary Gross Domestic Product q/q (Q1. 22): 0.8% (est. 1.0%)
UK GDP m/m (March): -0.1% (est. 0.0%)
UK Industrial Production m/m (March): -0.2% (est. 0.0%)
UK Manufacturing Production m/m (March): -0.2% (est. 0.0%)
US Producer Price Index and Core PPI m/m (April): 1:30PM
US Unemployment Claims: 1:30PM

Interbank rates:
​​​​​​​
GBP/USD – 1.2188
GBP/EUR – 1.1661
EUR/USD – 1.0451
USD/CAD – 1.3031

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