January 9, 2023

“The release of US CPI inflation on Thursday will be the main concern for traders after last week’s jobs data failed to offer a clear picture. Both headline and core rates of inflation are projected to be mild, as there is further indication that price pressures are easing.”

Tim Hallinan – Trading Director

Main Headlines

President Joe Biden travelled to El Paso, Texas, to assess enforcement operations at the US-Mexico border, his first trip to the border since taking office, just days after his administration announced new restrictions on asylum seekers amid record numbers of migrants attempting to cross into the US. The trip comes amid repeated Republican criticism of the president for not traveling to the southern border sooner and of what they say are his administration’s ineffective policies as the situation there has worsened. Biden plans to demand Republicans in Congress fund his request for border security resources and to work toward comprehensive immigration reform.

Rishi Sunak has revived efforts to secure London a role in the planned initial public offering of UK tech group Arm, after months of political turmoil in Westminster derailed an attempt last year. The UK prime minister met Arm chief executive Rene Haas last month in Downing Street, with Masayoshi Son, the founder of SoftBank, Arm’s Japanese owner, joining via video, according to two people familiar with the matter. SoftBank has previously indicated that it wants to list Arm, the chip designer that it acquired in 2016 for $32bn, in New York. The renewed London lobbying effort is focused on trying to share the listing with New York, according to people briefed on the discussions.

GBP

Sterling is well bid against most major currencies this morning. Manufacturers have warned that high energy costs will force them to cut jobs and production this year, with some bosses saying political chaos is damaging UK competitiveness and making the country less attractive to foreign investors. Unions warned the government on Sunday that strikes would continue unless it reopened this year’s pay settlement for health service workers ahead of crisis talks on Monday aimed at curtailing a wave of industrial action across Britain.

EUR

Euro is stronger against the dollar and weaker against sterling this morning. French President Emmanuel Macron’s government attempts to revive his economic reform drive and score a major political victory this week with a launch of the pension system’s overhaul in the face of vehement trade union opposition. Russia’s government extended support to a legislative amendment that would classify maps that dispute the country’s official “territorial integrity” as punishable extremist materials, the state-owned TASS news agency reported yesterday.

USD

The dollar is weaker than most major currencies in the early morning trade. Kevin McCarthy finally holds the US House speaker’s gavel after making concessions to a small group of hard-right Republicans who rejected him in 14 previous ballots. He sought to rally GOP lawmakers with pledges to champion spending cuts and strengthen border security. Representative Chip Roy, who was at the heart of last week’s wrangling, told CNN he’d welcome a battle over the debt ceiling. The American Farm Bureau Federation and machinery manufacturer Deere & Co signed a memorandum of understanding that ensures farmers have the right to repair their own farm equipment or go to an independent technician.

Markets

Stocks extended a global rally in risk assets, driven by China’s reopening trade and expectations of slower rate hikes. Europe’s Stoxx 600 Index climbed, with mining shares among those leading the advance. Wall Street equity futures pointed to more modest gains after the S&P 500 and Nasdaq 100 jumped in excess of 2% on Friday. The MSCI Emerging Markets Index is on track to enter a bull market after surging more than 20% from its October low. The dollar extended Friday’s drop as traders bet that the Federal Reserve will slow rate hikes, with the Institute for Supply Management’s index of services in contraction territory and wage growth slowing. Yields on benchmark 10-year Treasuries climbed.

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

7:45 a.m.: Switzerland Dec. Unemployment
8:00 a.m.: Germany Nov. Industrial Production
8:30 a.m.: Hungary Nov. Industrial Production
8:45 a.m.: France Nov. Trade Balance
9:00 a.m.: Switzerland Dec. Foreign Currency Reserves
10:00 a.m.: Italy Nov. Unemployment
11:00 a.m.: Euro-area Nov. Unemployment
11:30 a.m.: Germany, Netherlands to sell bills
12:00 p.m.: Ireland Nov. Industrial Production
2:50 p.m.: France to sell bills

Corporate Events

Earnings include Acuity Brands, Jefferies

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