Morning Report

February 20, 2023

“US futures contracts have become robust as a result of hawkish Federal Reserve comments, strong retail sales, and inflation readings that exceeded expectations, leading the market to anticipate that US interest rates will reach a peak of around 5.3% in July. The rise has also impacted the Eurozone and UK markets, with current pricing showing expectations that the ECB deposit rate will increase to approximately 3.7%, while the BoE’s rate is expected to reach a maximum of 4.4%.”

Tim Hallinan – Trading Director

Main Headlines

According to property website Rightmove, the average asking prices for residential property in Britain only increased by £14 in February compared to January, which is the smallest increase on record for a month that typically sees a significant seasonal rise. Rightmove suggests that property sellers are now pricing their homes realistically in order to sell them in a market that has slowed down significantly in recent months.

The Biden administration’s plan to fuel a historic building boom in the US is in jeopardy due to a shortage of construction workers. The Associated Builders and Contractors, an industry group, estimates that the construction sector could be short of as many as half a million workers this year. This shortage will increase project costs and delay a building campaign that executives say is comparable to that of the second world war.


Sterling is weaker than most major currencies in the early morning trade. Trade bodies and analysts warn that British businesses are facing an energy-cost cliff edge in April, as the introduction of a weaker government support package is likely to cause a significant increase in bills. Rishi Sunak is seeking to seal a deal with Brussels on post-Brexit Northern Ireland trade rules early this week, Boris Johnson, his predecessor as prime minister, is calling for a more confrontational approach.


Euro is stronger against sterling and weaker against the dollar this morning. US Secretary of State Antony Blinken strongly supports Sweden and Finland’s quick accession to NATO, given the steps they have already taken. However, his Turkish counterpart stressed the need for more concrete steps. EU diplomats are discussing the idea of pooling €4 billion in ammunition purchases for Ukraine as early as next month.


The dollar is well bid against most major currencies this morning. China warned the United States that it would “bear all the consequences” if it escalated the controversy over a Chinese balloon that the US military shot down this month. After a train operated by Norfolk Southern derailed in East Palestine, Ohio on February 3, US Transportation Secretary Pete Buttigieg announced that he would be urging major railroads to enhance their safety measures.


European and Asian stocks rose as renewed optimism for China’s economic recovery outweighed concerns US borrowing costs will stay higher for longer. The dollar took a breather from a three-week rally. The Stoxx Europe 600 Index advanced, trading near a one-year high, as expectations for Chinese demand propped up commodity stocks. The Shanghai Composite Index climbed the most since November. US equity-index futures and Treasury futures were lower as investors assessed hawkish comments by Federal Reserve officials. Trading volumes were thin amid a US holiday.

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

8:00 a.m.: Sweden Jan. CPI
9:30 a.m.: Riksbank minutes from February policy meeting
10:00 a.m.: Poland Jan. PPI, Sold Industrial Output
4:00 p.m.: Euro-Area Feb. Consumer Confidence
US public holiday


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