Morning Report

August 24, 2022

“Investors are bracing for the Federal Reserve to double down its commitment to defeating inflation – many expect Jerome Powell to reiterate the case for slowing the pace of rate hikes, this Friday at the annual central bank gathering in Wyoming, anticipating the delivery of an aggressive tightening message.”

Tim Hallinan – Trading Director

Main Headlines

US retailers are gearing up for a more price-sensitive customer ahead of the critical holiday selling season, as soaring inflation clouds their hopes for more normal levels of supply and demand than they saw during the first two years of the coronavirus pandemic. Some of the country’s largest store chains have reported robust back-to-school sales in recent days and said they expect consumers to prioritise celebrations with family and friends at Halloween, Thanksgiving and Christmas. But their optimism has been tempered by the acknowledgment that low-income consumers are struggling with higher food and petrol prices.

One of the UK’s largest energy groups has told ministers that a rescue plan to protect households from rising bills will need funding of more than £100bn over two years, underlining the scale of the crisis engulfing Britain as gas prices surge. Keith Anderson, chief executive of Scottish Power, last week met business secretary Kwasi Kwarteng and proposed capping household energy bills at about £2,000 a year. Liz Truss, the leading candidate for the Tory leadership, has acknowledged that new support for households could be needed, with the rise in bills expected to accelerate, but has maintained her distaste for “handouts.”


Sterling is stronger against euro and weaker against the dollar this morning. Growth in UK economic activity has slowed more than expected to an 18-month low as manufacturing shrank on weaker demand, supply shortages and labour. An influential group of MPs has written to the UK fiscal watchdog to ask if it is preparing for an emergency Budget in September, in an implicit criticism of Liz Truss, frontrunner to become the next prime minister. The Trades Union Congress says the minimum wage in the UK should rise to £15 an hour and should apply to workers of all ages instead of the current lower rate for under-23s.


Euro is weaker than most major currencies in the early morning trade. Power prices soared to records around Europe, heaping further pressure on governments to accelerate plans for how to shield households from devastating bills and rising inflation. The eurozone is in trouble and conditions are worsening as the fallout from the Russian invasion of Ukraine and Europe’s own economic challenges coincide. The United States will announce a new security assistance package for Ukraine of about $3 billion as early as today, in what would be the single largest tranche to Kyiv since Russia’s invasion six months ago.


The dollar is well bid against most major currencies overnight. US natural gas prices whipsawed yesterday, topping levels last traded during a historic commodity price boom in 2008, before changing course to fall on news that a large exporter of the fuel would remain closed for longer than expected. The price moves were reminders of the notorious volatility of the gas market. Even after the late decline, prices remained at levels last hit before shale drilling ushered in a decade of plentiful supplies. The US tax department is exploring ways to increase protection of its facilities amid an intense Republican backlash over $80bn in funding for the agency.


European stocks retreated and US index futures wavered as investors digested the latest hawkish noises from the Federal Reserve amid mounting signs of a global economic slowdown. The Stoxx Europe 600 index stretched its losing streak to a fourth day, the longest in two months. Euro-area sovereign bonds extended a selloff. Futures on the S&P 500 and Nasdaq 100 fluctuated before turning modestly lower, with markets on edge ahead of the Jackson Hole central bankers’ retreat later this week. Treasuries and the dollar were steady. Investors will pore over Fed Chair Jerome Powell’s speech at Jackson Hole on Friday for a sense of how hawkish the US central bank will be in the face of mounting economic challenges.

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

9:00 a.m.: Czech Republic Aug. Business, Consumer Confidence
10:00 a.m.: Poland July Unemployment Rate
10:00 a.m.: South Africa July CPI
12:00 p.m.: Riksbank’s Floden speaks
4:30 p.m.: EIA US Oil Inventory Report
6:00 p.m.: Russia Weekly CPI, July Industrial Production
Russia’s invasion of Ukraine hits the six-month mark on Ukraine Independence Day
Angola holds general election

Corporate Events

Earnings include Polyus, RBC, Petco, Salesforce, Snowflake, Splunk, Autodesk, Nvidia, Williams-Sonoma


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