Morning Report

July 31, 2023

“Today the Eurozone Core CPI Flash Estimate came in 0.1% higher than the forecast, standing at 5.5%. Meanwhile, the Prelim Flash GDP showed a promising 0.3%, marking a 0.4% increase from the last quarter and indicating a return to increased growth.” 

Tim Hallinan – Trading Director 

Main Headlines 

The White House has proposed energy project review reforms to expedite permits for electric transmission and emission-curbing projects. The proposal aims to revise NEPA regulations by promoting programmatic reviews for multiple projects, allowing federal agencies to exclude certain categories from review, and reducing the need for environmental reviews on projects with substantial positive impacts. In other news, US Supreme Court Justice Samuel Alito stated that Congress cannot regulate the court in response to a Democratic bill proposing an ethics code. The bill, approved by the Democratic-controlled Senate Judiciary Committee, seeks to impose a binding code on the court after allegations of justices, including Alito, failing to disclose luxury trips funded by wealthy donors.  

The FCA is prepared to act against any firm that fails to adhere to a new duty of justifying charges to customers. This reform represents one of the regulator’s most significant changes in decades. While firms regulated by the Financial Conduct Authority have been required to treat customers fairly, the previous approach did not prevent various mis-selling scandals. The new duty is more detailed, demanding “good outcomes” and preventing “foreseeable harm” for customers in terms of products, services, price, and value. It also includes understanding the products being sold and providing after-sales support. In other news, Britain will issue future licenses for North Sea oil and gas extraction as part of its energy independence strategy, drawing criticism from environmental activists. Prime Minister Rishi Sunak has confirmed over 100 such licenses, along with support for two carbon capture and storage clusters in Scotland and Northern England. 


Sterling is steady to the Dollar and weaker against the Euro this morning. Today we received several data points from the UK. Firstly, the M4 Money supply report for the month from the BoE, which reports the change in the total quantity of domestic currency in circulation and deposited in banks. The forecast was at 0.5%, however the actual figure was considerably lower at -0.1%. The BoE’s forecasted figure for the Mortgage approval rate was 49K, however the actual was 6K higher at 55K, which shows a substantial increase from the previous month. Lastly, the Net Lending to Individuals Monthly report measuring the change in the total value of new credit issued. Last month beat expectations and this trend continued, with the actual figure beating the forecast by 0.5 Bn to 1.8Bn. 


The Euro is stronger against the Dollar and Sterling this morning. There were several data points from the EU earlier. The first the Core CPI Flash Estimate, based on early CPI data from 13-euro area member states. Recent reports have been lower than forecasts but today the figure was up 0.1% to 5.5%, suggesting a potentially positive trend. Another report, the Prelim Flash GDP, which gauges economic activity and health, was also ahead of expectations, increasing from –0.1% last quarter to 0.3% today. 


The Dollar is steady to the Sterling and slightly weaker against the EUR. This afternoon, the Chicago Purchasing Managers Index will be released. It is a survey of around 200 purchasing managers in Chicago on business conditions and is a leading indicator economic health. The last few months have been all over the place, with no trend appearing, however the current forecast is set at 43.3. There will also be the Loan Officer Survey for the quarter released today, which is a survey of large domestic banks and branches of foreign banks in the US that asks respondents about changes in the standards and terms of the banks’ lending and the state of business and household demand for loans, and it is correlated with spending and consumer confidence. 


Bonds fell and stocks struggled for direction as traders parsed the latest commentary from central bankers for clues on the path for interest rates. European Central Bank President Christine Lagarde said at the weekend the ECB could hike again, even if it pauses at its next meeting. In the US, Federal Reserve Bank of Minneapolis President Neel Kashkari described the inflation outlook as “quite positive,” despite the likelihood of job losses and slower growth. Yields on German bonds and US Treasuries climbed. 

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

8:00 a.m.: Germany June Import Price Index, Retail Sales
8:00 a.m.: Denmark June Unemployment
8:30 a.m.: Hungary June PPI
9:00 a.m.: Czech Q2 GDP
9:00 a.m.: Austria July CPI
10:00 a.m.: Italy Q2 P GDP
10:00 a.m.: Poland July P CPI
10:30 a.m.: UK June Mortgage Approvals, M4 Money Supply
10:30 a.m.: Slovenia July CPI
10:30 a.m.: Poland Q2 P GDP
11:00 a.m.: Euro-area Q2 GDP
11:00 a.m. Euro-area July P CPI
11:00 a.m.: Italy July P EU Harmonized CPI
12:00 p.m.: Poland July P CPI
Bulgaria Central Bank Rate Decision 

Corporate Events 

Earnings include Arista Networks, Republic Services, ON Semiconductor 


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