Morning Report

August 14, 2023

“British employers plan a 5% increase in pay, while pay expectations in the public sector have surged to 4%. As swap rates stabilize and inflation cools, many lenders are unveiling additional mortgage rate reductions. Additionally, economists are speculating about the ECB’s potential 25 basis points rate hike next month, to be followed by projected rate cuts in March.”

Tim Hallinan – Trading Director

Main Headlines

As high temperatures approach, California’s power suppliers anticipate heightened electricity demand. They’re taking measures to ensure sufficient supply, stating that current energy levels meet demand, however emergency notifications could be issued for extra resources to prevent potential shortages and emergency circumstances. Also, President Biden has chosen a labour economist who supports substantial public-school spending to join his three-member Council of Economic Advisers. This underscores the importance of public education in Biden’s agenda leading up to 2024, as he contends that increased US government investment in early childhood education could raise wages and reduce poverty.

UK’s FTSE 100 index opened lower this morning, weighed down by miners and oil firms shares, as worries mounted over China’s economic recovery and its debt-laden property market. The FTSE 100 was down 0.3%, while the more domestically focussed FTSE 250) dipped 0.1%. In other news, Ukraine is in talks with Britain to establish security guarantees, with plans to finalize initial agreements by year-end. Seeking assurances from nations like the UK and US, Ukraine is working toward eventual NATO accession. Andriy Yermak, the Ukrainian president’s chief of staff, aims to have the first agreements in place by year-end.


Sterling was weaker than most major currencies in the early morning trade, but regained most of these as the European session opened. UK employers foresee a 5% pay rise and employ counteroffers to keep staff tempted by better wages elsewhere, a survey of employers showed. Prime Minister Rishi Sunak’s 6% pay increase proposal for public-sector workers followed the survey and the private sector’s 5% wage growth projection aligns with recent Bank of England findings. Also, following an unexpected second-quarter growth data and increased prospects of interest rate hikes, J.P. Morgan raised its UK annual economic growth forecast from 0.5% to 0.6% for 2023.


The Euro is well bid against most major currencies overnight. Earlier this morning, the German Wholesale Price Index report was released, which measures wholesale price fluctuations. The last few months have been overall negative compared to the forecast, and this month was no different, coming in at -0.2% compared to the –0.1% prediction. In other news, Economists foresee the ECB raising rates by 25 basis points next month, with rate cuts anticipated to commence in March, a month earlier than previously projected, with ING, Rabobank, and Saxo suggesting the ECB aims to counter escalating energy-driven inflation expectations.


The Dollar showed early strength against the Sterling and is weaker against the Euro this morning. The US Department of Energy unveiled $1 billion in federal grants for projects aimed at cutting 2 million metric tons of annual carbon emissions. It introduced efforts to lower costs to under $100 per metric ton of CO2, and funding for engineering studies for hub projects. Also, the downgrade of the US credit rating has not affected financial markets as much as anticipated, but it emphasizes ongoing risks such as rising interest rates, higher debt service costs, and healthcare spending, making some investors bet on rising longer-term borrowing costs.


China’s worsening property slump sapped confidence in global markets Monday, as evidence mounted that the world’s economic engine is stalling. Treasury yields edged toward new highs. The Stoxx 600 traded little changed with US futures as stocks struggled for direction in thin summer trading. Treasury yields edged up toward levels last seen in November on speculation the Federal Reserve will keep interest rates in restrictive territory and disappoint investors hoping for easier policy. Focus later this week will be on minutes of Fed’s latest policy meeting as traders seek clues on the central bank’s next move.

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

10:00 a.m.: Poland July CPI

Corporate Events

Earnings include Roivant


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