Morning Report

August 07, 2023

“Halifax’s House Price Index fell by 0.3%, deviating from the expected stability. German Industrial Production showed a notable -1.5% variance from forecasts, while the EU Investor Confidence report contradicted trends by exceeding predictions at -18.9, with a 54bps difference.”

Tim Hallinan – Trading Director

Main Headlines

The White House is pushing federal agencies to swiftly shift to more in-person work, stressing its importance for government services. In April, the White House Office of Management and Budget directed agencies to increase in-person work at main offices, and a July report from the Government Accountability Office showed 17 of 24 agencies using around 25% or less of headquarters capacity in early 2023. In other news, Bipartisan US senators have proposed a bill to establish national security councils in key Pacific Island nations housing significant US military bases. These nations, susceptible to China’s espionage and sway, would collaborate closely with US security efforts. The initiative is part of the expansive National Defence Authorization Act, recently approved by the Senate and advancing in legislative processes. The goal is to bolster coordination between the US and Palau, the Marshall Islands, and Micronesia.

British employers slashed hiring of permanent staff through recruitment agencies by the sharpest margin since mid-2020 last month, driven by economic uncertainty. This adds to indications of a more challenging job market, as a metric for permanent staff recruitment from the Recruitment and Employment Confederation and KPMG dropped to 42.4, its lowest point since the COVID lockdowns in June 2020. In other news, Dropping UK carbon market prices raise the chances of extra CO2 charges on steel exports to the EU. To access the European market, London might need to align with EU carbon policies. Sectors are preparing for the EU’s carbon border fee, starting 2026, targeting emission-intensive imports like steel, aluminium, and cement, unless the exporting nation matches CO2 pricing.


Sterling is stronger against the Euro and weaker against the Dollar this morning. Earlier this morning Halifax released the House Price Index monthly report, which measures the change in home pricing for those financed by Halifax. The forecast was anticipating no change, with the figure at 0.0%, however it was lowered by 3bps to -0.3% by the actual figure, showing a steeper decline than the last few reports have included. Later today we will be hearing from the Bank of England Chief Economist Huw Pill, who is due to speak about the Monetary Policy Report at a virtual event hosted by the BoE. Expect some degree of volatility as these public engagements are often used to drop subtle clues regarding future monetary policy.


The Euro is weaker than most major currencies in the early morning trade. Earlier this morning Destatis released the German Industrial Production monthly reporting, which measures the total change in value for manufacturing output. The Forecast of -0.4% was beaten by the actual reporting by 11bps to -1.5%, which continues the downward trend from previous months. Later in the morning, Sentix released the Investor Confidence report, which surveys around 2800 individuals and rates the relative 6-month economic outlook for the Eurozone. The forecast was set at -24.3, however the actual beat the figure by 54bps to -18.9, bucking the trend shown from previous months and showing a significant uptick.


The Dollar is well bid against most major currencies overnight. Later today the US Federal Reserve will be releasing their consumer credit reporting for the month, which measures the total value shift of instalment-based consumer credit. The current forecasted figure shows a steep downward trend from the previous months, with a 7.3Bn lower reporting. The last few months have shown a lack of trend when contrasted with the actual figures so we will see if this continues. There are also 2 speeches later today from 2 members of the Federal Open Market Committee (FOMC); with Philadelphia Fed President Harker due to speak about the economic outlook at an event hosted by Philadelphia Business Journal, and Federal Reserve Governor Bowman due to speak at a virtual Fed Listens event hosted by the Atlanta Fed. FOMC members’ rate decisions and public remarks hint at future monetary policy, which have been known to cause volatility.


Short-term German bonds rose as the central bank said it would stop paying interest on domestic government deposits, spurring a dash for higher-yielding bills. Global stock trading was mixed, with US futures ticking higher and Europe trading little changed. Wheat prices rose after a drone attack on a Russian oil tanker prompted a fresh wave of missile strikes by Moscow over the weekend. The yield on Germany’s two-year notes fell as much as six basis points to 2.95% after the Bundesbank said late Friday it will remunerate domestic government deposits at 0% from October 1.

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

7:45 a.m.: Switzerland July Unemployment
8:00 a.m.: Germany June Industrial Production
8:00 a.m.: Sweden July Budget Balance
8:00 a.m.: Norway June Industrial Production
9:00 a.m.: Switzerland July Foreign Reserves
6:00 p.m.: BOE’s Huw Pill speaks
Bank of Italy reports on Balance-Sheet Aggregates
Romania Monetary Polic

Corporate Events

Earnings include Aramco, KKR, Palantir, Lucid, Beyond Meat


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