Morning Report

August 16, 2021

“Caution persists in currency markets amid the surge of the Delta variant across the world. The dollar is pinned to Friday’s levels, after a University of Michigan survey showed consumer sentiment sliding to the lowest level since 2011. Retail sales data will give indication of consumer behaviour on Tuesday, while a number of events held by the Fed will be monitored by market participants for any comments on tapering plans.”

Tim Hallinan, Trading Director

Main Headlines

Taliban leaders marched into Kabul on Sunday, preparing to take full control of Afghanistan two decades after they were removed by the US military. The militant group took over the presidential palace, and said it plans to soon declare a new “Islamic Emirate of Afghanistan.” Hours earlier, American-backed President Ashraf Ghani fled the country. The US and its allies rushed to evacuate diplomatic and civilian personnel from Kabul over the weekend. Antony Blinken, US secretary of state, pushed back on suggestions that the evacuation echoed the final days of the Vietnam war, saying: “This is manifestly not Saigon.”

UK recruitment has surged this year bucking the traditional summer lull in job offers, as agencies warned of staffing shortages across the economy as employers sought to fill roles. In July, the number of permanent vacancies advertised by recruitment agencies rose 43 per cent, and 53 per cent for contract vacancies, compared with the previous year, according to figures released on Monday by the Association of Professional Staffing Companies. The jump in vacancies points to a tightening of the jobs market as employers seek to plug staffing gaps prompting some businesses to warn of labour shortages.


Sterling is weaker versus most major currencies this morning. Boris Johnson is expected to delay his much-awaited Cabinet reshuffle until after the COP26 climate change summit in November, and to when the government is confident that the worst of the pandemic has passed. UK ministers have launched an investigation into how energy suppliers market renewable electricity deals, following criticism that many companies are guilty of “greenwashing”. The Government’s “levelling up” plan will require a similar scale of funding to the near £2 trillion spent on reunifying Germany after the fall of the Berlin Wall, Centre for Cities has calculated.


The euro is stronger against the pound and weaker against the dollar overnight. Spain’s leftwing government is devoting almost a tenth of the €70bn in grants it expects to get from the bloc’s emergency coronavirus recovery fund to modernising existing buildings to make them more energy efficient, despite criticism about ploughing money into the construction sector. Italy’s organized crime syndicates are in the frame for the ferocious wildfires that have devastated the country’s southern regions, as criminal organisations are looking to benefit from the first tranche of the European Union’s post-pandemic economic recovery fund of €209bn.


The dollar is higher against most majors in the early morning trade. A crunch in the supply of new US government bonds is looming, reducing expectations that the Federal Reserve’s withdrawal of its crisis-era stimulus programmes could jolt Treasury prices lower. California is struggling to contain the Dixie wildfire which has been burning since July 14 – it has scorched 2,065 sq km of land, and only 30 per cent of it is contained to date. As drought persists across more than 95% of the American West, water elevation at the Hoover Dam has sunk to record-low levels, endangering a source of hydroelectric power for an estimated 1.3 million people across California, Nevada and Arizona.


September contracts on the S&P 500 Index declined 0.3% after the underlying gauge notched up another record high on Friday. Ten-year U.S. yields slid three basis points. Chinese stocks gave up gains as the country’s retail sales and industrial output data showed activity slowed more than expected. Investors are awaiting a town hall by Fed chair Jerome Powell on Tuesday for clues on whether a recent string of strong economic data qualify as “further progress” for the central bank to consider tapering stimulus. Speculation about an announcement at the Jackson Hole meeting deepened even as data Friday showed U.S. consumer confidence plunged to a near-decade low.

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

10:00 a.m.: Turkey July central govt.’s budget balance
11:30 a.m.: Germany to sell bills
11:30 a.m.: Netherlands to sell bills
2:50 p.m.: France to sell bills

Corporate Events

Earnings include Roblox, Tencent Music, Oatly, Sasol

To learn more about Ballinger & Co., please visit our website or our LinkedIn and Twitter pages.