Morning Report

July 23, 2021

“The European Central Bank has been ramping up the efforts to convince markets that it will keep ultra-loose policy, including record-low negative interest rates, in place for as long as needed to revive price stability. The dollar has mostly been resilient despite the EU stance, and despite Wall Street earnings giving investors some confidence, which had earlier been lost to worries over the global Delta variant spread.”

Tim Hallinan, Trading Director


Main Headlines

US labour market showed that the number of people receiving jobless benefits fell to the lowest level since early in the pandemic as states withdrew from participation in federal pandemic relief. Continuing payments made through all unemployment benefit programs fell by 1.3 million in the week ended July 3, to 12.6 million. First-time applications rose as supply constraints persisted in the auto industry. Meanwhile, continued strong demand pushed the median U.S. home price to a record high in June, though the national house-buying frenzy cooled slightly as supply ticked higher.


UK retail sales surged unexpectedly in June as consumers spent more in grocery stores to celebrate the European championship, adding momentum to the economic recovery. The volume of goods sold in shops and online rose 0.5% from the month before, the Office for National Statistics said Friday. Economists had expected a 0.1% drop. Consumer spending has driven up inflation above the Bank of England’s target for the first time in almost two years in the past two months. The BoE is considering whether to pare back the stimulus as soon as next month.



Sterling is lower against most major currencies this morning. Boris Johnson has backed an emergency plan to avoid disruption of UK food supplies caused by Covid-related staff shortages, although the government’s plans were denounced as inadequate by some supermarket bosses. Elsewhere, the post-Brexit relationship between the U.K. and the EU is set to be tested once again over the Northern Ireland Protocol on customs checks and procedures. The European Commission is planning to file a “reasoned opinion” on what it sees as UK breaches of the protocol.



The euro is stronger versus the pound and unchanged against the dollar overnight. Christine Lagarde promised that the European Central Bank has learned from the errors of past crises and won’t derail the current economic recovery by withdrawing emergency support too early. The ECB president spoke on Thursday as the central bank put into action the new monetary policy strategy. It revised guidance on interest rates, tying policy shifts more tightly to hitting its new 2% inflation goal, and said it won’t necessarily react immediately if price growth exceeds that target for a “transitory” period.



The dollar is higher against the pound and unchanged against the euro in the early morning trade. Advisory Committee on Immunization Practices, the panel of health experts advising the US government on vaccines, expressed preliminary support for giving Covid-19 boosters to immunocompromised people, but said they were waiting for regulatory action before making a formal recommendation. Meanwhile, claims about alleged side-effects of coronavirus shots are causing vaccine hesitancy in the US. President Biden has urged Facebook to tackle misinformation and encouraged more Americans to get inoculations.



US and European contracts rose after the S&P 500 advanced closer to a new peak. Technology firms like Microsoft Corp. rallied and the Nasdaq 100 reached a record, while cyclicals lagged. Strong results from Twitter Inc. and Snap Inc. boosted Facebook Inc. and Alphabet Inc. in extended trading. In Asia, Hong Kong stocks slid as potential penalties for ride-hailing giant Didi Global Inc. sapped sentiment toward Chinese tech firms. Japan’s market was shut for a holiday. Longer-term Treasuries snapped a two-day drop Thursday and strong demand for an auction of 10-year inflation-protected securities produced a record-low yield. Oil held most of a three-day increase amid expectations of tightening supplies as demand recover


Main Economic Data/Central Banks/Government (all times CET)

8:00 a.m.: U.K. June Retail Sales

9:15 a.m.: France July P Markit PMIs

9:30 a.m.: Germany July P Markit PMIs

9:30 a.m.: Sweden June PPI

10:00 a.m.: ECB Survey of Professional Forecasters

10:00 a.m.: Euro area July P Markit PMIs

10:30 a.m.: U.K. July P Markit/CIPS PMIs

12:00 p.m.: U.K. to sell 1.5 billion pounds of 182-day bills; 1 billion pound of 91-day bills and 500 million pounds of 28-day bills

12:30 p.m.: Bank of Russia Rate Decision

The Tokyo Summer Olympics begin, through Aug. 8

U.S. July Markit Manufacturing, Services, Composite PMIs

Corporate Events

Earnings include Lonza, Thales, Kesko, Danske Bank, Norsk Hydro, Reliance, Honeywell, NextEra, American Express, Schlumberger

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