Morning Report

October 1, 2021

“The dollar began Q4 of 2021 near its highest level of the year and headed for its best week since June, as currency markets braced for US interest rates to rise before those of major peers.”

Tim Hallinan, Trading Director

Main Headlines

President Biden’s trillion-dollar bipartisan infrastructure plan suffered a significant setback late Thursday night when House Democratic leaders, short of support amid a liberal revolt, put off a planned vote on a crucial plank of their domestic agenda, the $550 billion Infrastructure Bill. The White House says the bipartisan bill is closer than ever and work will resume this morning. Some Democrats still want cuts to the overall agenda. Democratic leaders and supporters of the bill insisted the postponement was only a temporary setback. The infrastructure vote was rescheduled for Friday, giving them more time to reach agreement on an expansive climate change and social safety net bill that would bring liberals along.

UK business leaders have warned ministers about an “autumn storm” of rising taxes, escalating costs, labour shortages and supply disruption as government Covid-19 support schemes come to an end. Business groups are reporting a sharp fall in confidence among members after the summer, when many had been buoyed by the Covid vaccine rollout and end of restrictions. However, third-quarter data that will be published next week by the British Chambers of Commerce is expected to show that rising costs for wages and materials, along with skills shortages are causing concern. Business confidence will also fall according to a report by the Institute of Directors, published on Friday.


Sterling is lower against most majors overnight. Following the trial of Wayne Couzens, who kidnapped and killed Sarah Everard, Dame Cressida Dick encouraged the public to challenge the legitimacy of the Met Police if stopped by a lone plain-clothes officer. She also pledged that the force has learned from one it’s most dreadful events and will do everything in her power to win back public trust. Driver and labour shortages are causing further supply chain woes in the UK, as issues spread into the agricultural sector, putting pumpkin distribution at risk and forcing abattoirs to face the prospect of culling thousands of pigs.


The euro is lower against the dollar but higher against sterling in early morning trade. The French government will freeze gas prices and cut taxes on electricity to slow energy inflation, the prime minister announced Thursday evening. The price of gas is slated to jump 12.6 percent on Friday. Castex confirmed this increase would indeed occur but vowed to put a halt to any further rises again. European Parliament President David Sassoli will not chair the plenary session of the assembly next week as he continues to recover from pneumonia. EU countries have shipped only around 44 million doses of the coronavirus vaccines they pledged to share with the rest of the world. That’s 9 percent of the 500 million doses that the EU promised to share at a Council summit in September 2021.


The dollar is strong against most majors overnight. President Biden signed a short-term spending bill averting a government shutdown on Thursday evening that extends federal funding through early December and provides emergency aid to support both the resettlement of Afghan refugees and disaster recovery efforts across the country. The president’s signature came after lawmakers hastily cleared the measure in both chambers earlier in the day. The Senate’s vote was 65 to 35; the House’s was 254 to 175. A University of Washington study published in The Lancet highlighted that killings by police in America have been undercounted by more than half over the last four decades.


U.S. and European futures started October on the back foot alongside Asian stocks, after overnight losses in the S&P 500 capped its biggest monthly selloff since March 2020. Shares slumped in Japan and Australia, and a gauge of Asian stocks hit its lowest in more than a month. The S&P 500 closed at the lowest level since July, extending its September losses to almost 5%. Economically sensitive companies like industrials and financials were among the worst performers. Infighting among President Joe Biden’s Democrats signals his big spending plans will likely be both delayed and reduced. Treasuries edged higher, with the 10-year yield dipping below 1.50%. Crude oil fluctuated after a tumultuous session during which China was said to order its top energy companies to secure supplies at all costs amid shortages, prompting the White House to reiterate its own concerns over rising prices.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: Russia Sept. Markit manufacturing PMI
8:00 a.m.: Germany Aug. retail sales
8:30 a.m.: Sweden Sept. Swedebank/Silf PMI manufacturing
9:15 a.m.: Spain Sept. Markit manufacturing PMI
9:30 a.m.: Switzerland Sept. manufacturing PMI
9:45 a.m.: Italy Sept. Markit manufacturing PMI
9:50 a.m.: France Sept. Markit manufacturing PMI
9:55 a.m.: Germany Sept. Markit/BME manufacturing PMI
10:00 a.m.: Euro-area Sept. Markit manufacturing PMI
10:30 a.m.: U.K. Sept manufacturing PMI
11:00 a.m.: Danish Sept. PMI survey
11:00 a.m.: Euro-area Sept. CPI
12:00 p.m.: U.K. to sell bonds
5:30 p.m.: ECB’s Schnabel speaks at Fed conference
7:00 p.m.: Baker Hughes U.S. rig count

France sovereign debt to be rated by S&P

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