Welcome to the mainland

Today’s news headlines:

  • ‘China risks new Hong Kong protests by imposing security law’. The pro-Beijing legislators led by Chief Executive Carrie Lam failed to pass an extradition bill last year – which would have allowed Hong Kong citizens to be tried in China for certain crimes – triggering mass protests. The Chinese now feel their grip on the territory slipping, leading them to consider passing security law legislation, which would erode the one country, two systems arrangement and, with it, risk loss of special trade privileges with the US (Financial Times)

  • ‘British banks warn BoE of pain of negative rates’. Even considering all of the action taken by central banks over the past decade, the absence of government fiscal action has kept the pressure on treasury officials to ask yet more of them. Over the past two weeks, it has become clear that in some quarters of the Bank of England’s Monetary Policy Committee, there's some appetite to consider a negative interest rate policy. British Banks sensing the pressure have made it clear that such a move could spell serious troubles for the sector. (Financial Times)

Today's events, rates, and data 

  • The Chinese announcement to push forward with Hong Kong integration into the mainland caused a great deal of market anxiety. Equities came off, the Dollar Index, Japanese Yen, and gold all gained. Heading into a quiet economic data calendar and a bank holiday on Monday, there is little impetus for markets to do anything but settle into safe mode over the long weekend.

Today's events

UK Retail Sales                               -18.1% vs -5.1% last month
ECB Monetary Policy minutes        12:30pm


Interbank rates:

GBP/USD – 1.2180
GBP/EUR – 1.1160
EUR/USD – 1.0910