Morning Report

February 15, 2023

“After yesterday’s volatility, markets continue to exhibit caution this morning with the US Dollar maintaining its strength against other major currencies. Today’s data releases from the US include January Retail Sales and Industrial Production, as well as the NY Fed’s Empire State Manufacturing Survey. Later in the day, ECB President Christine Lagarde will deliver a speech, which will be closely watched.”

Tim Hallinan – Trading Director

Main Headlines

The US Department of Health has proposed three pilot projects aimed at lowering drug prices for people enrolled in government health insurance plans. These projects include offering some essential generic drugs for just $2 a month. The Centers for Medicare and Medicaid (CMS) will test the models in the Medicare health program for those aged 65 or over and the disabled, and the Medicaid program for the poor.

UK bank Barclays has reported a 14% drop in annual profits due to increasing expenses and a costly administrative blunder, which resulted in significant fines. The bank’s investment bank also saw a collapse in deal fees earned, contributing to the decline in profits. Barclays reported a pre-tax profit of £7 billion ($8.5 billion) for 2022, just below the average analyst forecast of £7.2 billion. Shares in the bank fell 8% in early trading, on track for their biggest one-day fall since Russia invaded Ukraine.


Sterling is weaker than most major currencies in the early morning trade. UK consumer price inflation fell more than expected to 10.1% in January, down from December’s 10.5%, according to official data. There were also drops in underlying measures of price growth that the Bank of England is closely monitoring. Earlier this month, the Bank of England suggested it was close to ending its run of interest rate hikes, although investors still expect another increase in borrowing costs next month. Today’s data may add to the sense that a peak in Bank Rate is not far off.


Euro is stronger against sterling and weaker against the dollar this morning. The operator of Germany’s largest airport in Frankfurt has issued a warning that planned strikes at seven airports in the country on Friday will cause significant disruptions. This follows a call from the German trade union Verdi, urging workers at Frankfurt, Munich, Stuttgart, Hamburg, Dortmund, Hanover, and Bremen airports to go on a 24-hour strike due to limited progress in collective bargaining efforts related to wage disputes.


The dollar is well bid against most major currencies overnight. The US dollar remained strong this morning following the release of US inflation data and remarks from central bank officials yesterday. US consumer inflation came in at 6.4% year-on-year for January, higher than the 6.2% economists had expected. This led to selling in the bond market and Fed funds futures, as hopes that interest rates could be cut later this year faded.


The UK’s export-oriented FTSE 100 edged lower this morning, limited by a drop in sterling after domestic inflation eased more than expected and Barclays’ drop in annual profit. European markets ended a choppy session 0.1% higher yesterday after US inflation grew slightly more than expected. The Stoxx 600 touched a one-year high. In the US, benchmark 10-year Treasuries fell to a session low of 3.622%, rose to a session high of 3.759%, and then traded flat on the day at 3.7206%. US stocks fell at the open, which followed the data release.

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

8:00 a.m.: UK Dec. Unemployment, Weekly Earnings
11:00 a.m.: Euro-Area 4Q GDP, Employment
12:00 p.m.: US Jan. NFIB Small Business Optimism
2:30 p.m.: US Jan. CPI
3:00 p.m.: Riksbank’s Thedeen speaks
3:30 p.m.: Fed’s Barkin on BTV
5:00 p.m.: Fed’s Logan speaks
5:30 p.m.: Fed’s Harker speaks
5:30 p.m.: ECB’s Makhlouf speaks


Corporate Events

Earnings include Coca-Cola, Airbnb, Carrefour, TransUnion, TripAdvisor, Norsk Hydro, Endava, Telecom Italia, Thyssenkrupp


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