War games

Today's news headlines:

‘Tories Fear Johnson May Call Snap Election If He Faces Rebellion’. Conservative MPs are war-gaming how to oust Boris Johnson from power, and concerns have surfaced that the Prime Minister could respond with a snap general election. Even if the threshold of 54 Tory MPs (15% of the total) is reached for a no-confidence vote, Johnson would likely survive because a full majority would be needed to remove him from office. Nevertheless, a snap election would be a massive gamble, with the Conservatives trailing the opposition in recent polling. YouGov modelling suggests that if an election was called today, the Tories would suffer heavy losses, with Johnson likely losing his own seat. (Bloomberg)

‘China Factory Activity Falls at Slower Pace as Covid Curbs Ease’. Manufacturing activity in China contracted for the third consecutive month as both production and new orders fell. The slowdown in the Caixin Manufacturing Purchasing Managers’ Index came at a reduced rate, although export orders continued to fall significantly, with some firms pointing toward difficulties in shipping to clients. The data is expected to improve as both Shanghai and Beijing ease their latest Coronavirus restrictions. (Bloomberg)


Today

Markets turned mixed overnight after a positive start to the week, following weak Chinese data and reopening challenges in Hong Kong. US and European contracts, as well as Japanese equities, rose, with the Yen weakening to 130 versus the US Dollar. Treasuries declined, with the US 10-year yield turning closer to 2.9%.

Events

Australian Gross Domestic Product q/q: 0.8% vs 3.6% previously
China Caixin Manufacturing Purchasing Managers’ Index: 48.1 vs 46.0 previously
German Retail Sales m/m: -5.4% vs 0.9% previously
European Central Bank President Christine Lagarde speaks: 12:00PM
Bank of Canada Rate Statement & Overnight Rate: 3:00PM
US ISM Manufacturing PMI: 3:00PM
US JOLTS Job Openings: 3:00PM
Federal Open Market Committee member Bullard speaks: 6:00PM


Interbank rates:

GBPUSD: 1.2605
GBPEUR: 1.1741
EURUSD: 1.0730
USDCAD: 1.2655

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