Morning Report

June 21, 2023

“UK inflation exceeded expectations, intensifying the pressure on the BOE for significant interest rate hikes. May’s CPI remained at 8.7%, while core inflation unexpectedly rose to 7.1% from 6.8%.  Later today, markets will closely watch Fed Chair Powell’s testimony to the House Banking Committee, hoping to gather insights on future monetary policy.”

Sam Cornford, Partner – Head of Trading

Main Headlines

The United States plans to impose more restrictions on Myanmar’s military junta to cut off financial support. New sanctions on Myanmar Foreign Trade Bank and Myanmar Investment and Commercial Bank are expected to be announced by Washington. Previous sanctions have already been imposed by the US and other Western nations after Myanmar’s military leaders seized power in a 2021 coup, overthrowing the democratically elected government of Aung San Suu Kyi and leading to a violent crackdown resulting in the deaths of many protesters.

Britain’s public debt exceeded 100% of the country’s economic output in May, according to the Office for National Statistics. The total debt, excluding that of state-controlled banks, reached £2.567 trillion, which is equivalent to 100.1% of the gross domestic product. This news caused the FTSE 100 index to drop to a three-week low. Alongside this morning’s inflation data, traders are now considering the possibility of a 50-bps interest rate hike by the Bank of England tomorrow, instead of the previously anticipated 25-bps hike.


Sterling is weaker than most major currencies in the early morning trade. The year-on-year CPI report from the National Officer of Statistics showed that the rate of price increases has stayed steady at 8.7%, even though there were predictions of a decrease, with economists expecting a slight drop to 8.4%. This result raises doubts about the government’s ability to fulfil its promise of reducing inflation by half this year. We have also received the public sector report, which measures the difference in value between spending in income for public corporations, the central government, and local councils during the previous month. The reporting figures were lower than the forecast, which is a stark difference from the previous months reporting and shows a surplus, we will see if this trend continues.


The Euro is stronger against both Sterling and the Dollar this morning. Later today, there will be an auction for German 30-year Bonds. These investors determine the yields, which can give us clues about their expectations for future interest rates. The bid-to-cover ratio, which shows the demand and liquidity in the bond market, can help us understand how confident investors are feeling. Later today we will be hearing from the German Bundesbank President and Member of the ECB Governing Council Joachim Nagel, who is due to deliver a speech titled “Inflation – too sticky for comfort” at an event hosted by the German Council of Economic Experts in Berlin. Trades will watch him comments closely as Nagel is considered to be one of the more influential members of the ECB council.


The Dollar is weaker against the Euro but stronger against Sterling today. Federal Reserve Chair Jerome Powell will be speaking in Washington DC before the House Financial Services Committee to discuss the Semi-Annual Monetary Policy Report. After his speech, there will be a question-and-answer session. These are not known in advance, which can sometimes lead to unexpected moments that have a big impact on the market. Traders closely analyse his public appearances because they often provide subtle hints about future monetary policy. Later today, we will also hear from Federal Reserve Governor Lisa Cook and Phillip Jefferson. They are scheduled to testify before the committee on Banking, Housing, and Urban Affairs.


Stocks fell, as still-rampant consumer price pressures in Britain proved a cautionary tale for global central banks fighting inflation and markets wagering they’re close to the end of their tightening cycles. Traders ramped up bets for further Bank of England interest-rate hikes after another shock inflation reading, pricing the benchmark reaching a level not seen since the turn of the century. The Stoxx Europe 600 slid 0.3%, with the FTSE 100 Index down 0.5%. Real estate stocks were among the worst performers, followed by utilities.

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

8:00 a.m.: UK May CPI, RPI, PPI, Public Sector Net Borrowing
8:00 a.m.: Sweden May Unemployment
8:00 a.m.: Euro-area May car registrations
9:00 a.m.: Switzerland May M3
9:00 a.m.: Turkey June Capacity Utilization
9:15 a.m.: NIER’s Swedish Economy Report
10:00 a.m.: ECB’s Kazimir speaks
10:00 a.m.: Poland May PPI, Sold Industrial Output
10:30 a.m.: UK April House Price Index
11:30 a.m.: Germany to sell bonds
12:00 p.m.: UK June CBI Trends Selling Prices
2:30 p.m.: Czech rate decision
3:45 p.m.: ECB’s Schnabel, Nagel speak
4:00 p.m.: Fed’s Powell appears before House Financial Services panel
6:00 p.m.: Russia May PPI, Weekly CPI
France May Retail Sales


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