Smoke and mirrors

Today's news headlines: 

‘Gas markets whipsaw after Russia offers to stabilise energy prices’. Russian President Vladimir Putin put his country forward yesterday to try and contain the rise in energy prices by offering to boost the production of natural gas. Over the past months, one of the main drivers of the rally in prices has been the restrictions surrounding supply that Russia had originally imposed with Ukraine, accusing them of weaponising supplies. Yesterday, natural gas prices hit levels ten times higher than those seen at the start of the year before quickly retreating after Putin’s comments. Surging energy prices continue to have knock-on effects in the bond market, as the 10-year Gilt in the UK hit its highest levels since May 2019. (Financial Times)

‘Poland raises interest rates for first time since 2012’. Year-over-year inflation in Poland hit its highest level for almost 20 years in September, reaching 5.8%. This has forced the National Bank of Poland’s hand in opting to lift the country’s base interest rate by 40 basis points to 0.5% yesterday. This was a somewhat surprising announcement, with the bank being one of the most Dovish in the European Union. Of 29 economists previously polled by Bloomberg, all failed to predict any hike in rates. EUR/PLN is trading just over 4.55 Zloty per Euro after falling 1.0% yesterday on the back of the Hawkish tilt from the Polish central bank. (Financial Times)


Today

UK markets took a hit yesterday after a relatively weak Construction Purchasing Managers’ Index print; the FTSE 100 closed out the day 1.15% lower. Fears around inflation and the debt ceiling continue to cloud US markets, with the S&P 500 falling 0.49% yesterday. The US 10-year Treasury yield holds ground at around 1.53% as the debt ceiling deadline looms.

Events

Switzerland Unemployment Rate: 2.8% vs 2.9% last month
German Industrial Production m/m: -4.0% vs 1.3% last month
Italy Retail Sales m/m: 9:00AM
European Central Bank Monetary Policy Meeting Accounts: 12:30PM
US Unemployment Claims: 1:30PM
Federal Open Market Committee member John Williams speaks: 1:40PM
Canada Ivey Purchasing Managers’ Index: 3:00PM
Bank of Canada Governor Tiff Macklem speaks: 5:00PM


Interbank rates:

GBP/USD – 1.3595
GBP/EUR – 1.1757
EUR/USD – 1.1563
USD/CAD – 1.2565

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