Morning Report

April 13, 2023

“Treasury yields declined while global stocks experienced a modest decline following the release of minutes from the Federal Reserve’s recent policy meeting, which revealed concerns about potential stress in the banking sector that could potentially lead to an economic recession. Meanwhile, Asian stocks faced challenges as tech and property selling in Hong Kong weighed down the market.”

Sam Cornford, Partner – Head of Trading

Main Headlines

The annual inflation rate in the US dropped to 5% last month, marking the slowest pace of price increases since 2021 when they first began to rise. The monthly consumer price index (CPI) for March showed a decrease in the rate of inflation over the past year. In February, the annual inflation rate was 6%, which was already a significant decline from its peak of 9.1% in June. However, core inflation, which excludes volatile energy and food prices, remained relatively stable, indicating that the slowdown in inflation could be attributed to comparisons against high gas prices from a year ago, when Russia invaded Ukraine.

The UK economy experienced stagnation in February, but revised data from the previous month has pushed it back to its pre-pandemic level. The Office for National Statistics reported an updated expansion of 0.4% in January, resulting in an unchanged growth rate in February, which was below the 0.1% expansion forecasted in a Reuters poll. The British economy ended February 0.3% above its February 2020 level before the first Covid-19 restrictions, but it continues to lag behind other G7 economies in terms of recovery. The services sector contracted by 0.1%, while construction grew by 2.4%.


Sterling is stronger against the dollar and weaker against euro this morning. EY’s UK leaders have warned partners to prepare for cost-cutting and staff departures after the collapse of the firm’s attempt to split its global business. Commodity broker Marex is considering listing in New York to revive its plans for an initial public offering, after cancelling a listing in London in 2021 with a targeted valuation of $650 million to $800 million. British property surveyors are less pessimistic about the housing market in March, with fewer reporting falling house prices and a majority expecting sales to rise in the next year.


Euro is well bid against most major currencies this morning. Italy’s sovereign debt has offered the best returns among major government bond markets this year, defying expectations of fears about the country’s heavily indebted finances despite the potential rise in eurozone interest rates. European Central Bank policymakers are leaning towards a 25-basis point interest rate hike in May. Germany’s foreign minister visits China to assert a common EU policy towards Beijing after remarks by the French President, Emmanuel Macron, suggested disarray in the continent’s approach to China.


The dollar is weaker than most major currencies in the early morning trade. Flows into exchange-traded funds nearly tripled to $62.1 billion last month, with the majority going into safe assets like government debt as investors sought shelter from the recent banking crisis. Developed market government bond ETFs attracted a record $33.2 billion, surpassing the previous monthly peak set in May 2022, according to data from BlackRock. Hollywood and Silicon Valley executives are underestimating the likelihood of a potential military attack on Taiwan by Chinese President Xi Jinping, according to the Republican chair of a new House committee focused on threats from the Chinese Communist Party.


European equities rose with US equity futures on Thursday as investors digested inflation data and parsed comments from policymakers to try to determine the end point of an era of aggressive rate hikes by global central banks. The Stoxx Europe 600 Index posted a modest gain after European Central Bank’s Governing Council member Francois Villeroy de Galhau said the bank has already finished most of the interest-rate increases. Contracts for US stocks pointed to a recovery after the S&P 500 and tech-heavy Nasdaq 100 closed Wednesday near session lows. Treasury yields stayed in a narrow range, with the two-year at 3.94%.

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

10:30 a.m.: BOE’s Bank Liabilities/Credit Conditions Survey
11:00 a.m.: Italy Feb. Industrial Production
11:00 a.m.: Euro area Feb. Industrial Production
12:00 p.m.: Ireland March CPI
12:00 p.m.: Portugal March CPI
1:45 p.m.: ECB’s Nagel speaks
2:30 p.m.: US March PPI Final Demand, weekly Jobless Claims
3:00 p.m.: BOE’s Pill speaks
8:00 p.m.: ECB’s Nagel speaks

Corporate Events

Earnings include Infosys, Virgin Orbit, Delta Air Lines, Bed Bath & Beyond


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