Time to reconsider
Today's news headlines:
'IMF tells UK to "re-evaluate" tax cut as global criticism mounts'. In a break from the norm, the International Monetary Fund has criticized the slew of unfunded and ill-aimed UK tax cuts planned for November. A spokesperson for the lender stressed that fiscal and monetary policy should be working together and that large untargeted fiscal packages would likely increase inequality. So far, the Chancellor and Prime Minister are sticking to their proposals, but the pressure is mounting for them to reconsider before the planned release. Markets continue to sell off in reaction, with Sterling lower this morning. (Bloomberg)
'European gas jumps as energy conflict with Russia escalates'. The energy conflict between Russia and Western Europe took another sour turn yesterday, as Gazprom warned that flows through Ukraine might be cut off due to a legal spat. This adds to existing concerns over shortages leading to blackouts through the winter, after the most recent leak to the Nord Stream pipeline. Elsewhere, Russia moved to annex a chunk of Ukrainian territory after claiming victory in a number of hastily held referendums. (Bloomberg)
The US Dollar soared higher overnight, and risk assets sold off globally as Fed officials came out with hawkish sentiment yesterday. Ten-year treasury yields hit 4% for the first time since 2010, while European and US equity futures sank. Elsewhere, leaks to the Europe-Russia gas pipeline heightened tensions after US and German officials claimed sabotage, leading to another leg higher in gas futures.
UK BRC Shop Price Index y/y: 5.7% vs 5.1% previously
ECB President Lagarde speaks: 8.15am
US Pending Home Sales m/m: 3.00pm
FOMC Member Bullard speaks: 3.10pm
Fed Chair Powell speaks: 3.15pm
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*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.