March 10, 2022

“European Central Bank officials are due to meet today to discuss surging inflation and steps to encourage an economic rebound from the fallout caused by the war in Ukraine – interest rates are expected to be held at historic lows.”

Sam Cornford, Partner – Head of Trading

Main Headlines

The US House of Representatives on Wednesday voted to rush $13.6 billion in aid to Ukraine as it battles invading Russian forces, along with $1.5 trillion to keep US government programs operating through Sept. 30 and avoid agency shutdowns this weekend. The House approved the wide-ranging appropriations in bipartisan votes, sending the legislation to the Senate which aims to act by a midnight Friday deadline when existing US government funds expire. House Speaker Nancy Pelosi indicated that the $13.6 billion is likely to be just the tip of a much broader aid effort. “All of us will have to do more” to help Ukraine in coming weeks or months and over the long-term to help it rebuild, Pelosi told reporters at her weekly news conference.

Rishi Sunak will need to find an extra £10bn if UK public sector workers are to avoid a painful pay squeeze in the year ahead, as inflation erodes the value of last autumn’s spending settlement for government departments, a leading think-tank warned today. Even before the outbreak of war in Ukraine, inflation was set to peak above 7 per cent in April, and to remain around four percentage points higher during the next fiscal year than the Office for Budget Responsibility forecast last October. Since spending settlements are set in cash terms, this would already be enough to wipe out a quarter of the real-terms increases that were planned, the Institute for Fiscal Studies said in analysis published ahead of the chancellor’s spring statement, due on March 23.

GBP

Sterling is stronger against the euro and weaker against the dollar this morning. Britain is looking at easing its visa requirements for Ukrainian refugees, a minister said on Thursday, after the government faced widespread condemnation for prioritising bureaucracy over the welfare of those fleeing war. Boris Johnson has paved the way for a possible lifting of the UK ban on fracking for shale gas as he draws up a new energy supply strategy following Russia’s invasion of Ukraine. The prime minister is seeking more domestic sources of energy after unveiling plans on Tuesday for a British ban on Russian oil imports, which triggered the biggest one-day price increase in diesel in more than 20 years. Coronavirus is no longer significantly more dangerous than flu in the UK. Research shows that the number of people dying from Covid has plummeted since the vaccination rollout began accelerating in January 2021.

EUR

The euro is weaker than most major currencies in the early morning trade. The World Bank’s chief economist, Carmen Reinhart, said that Russia and Belarus are edging close to default given the massive sanctions imposed against their economies by the United States and its allies over the war in Ukraine. Foreign ministers from Russia and Ukraine will meet in Turkey on Thursday in the first high-level talks between the two countries since Moscow invaded its neighbour, with Ankara hoping they could mark a turning point in the raging conflict. Russians have flocked to set up businesses and buy property in the United Arab Emirates to secure residence and park assets in the Gulf as the US, UK and EU tighten financial sanctions, relocation experts, brokers and lawyers said.

USD

The dollar is well bid against most major currencies overnight. The Biden administration warned on Wednesday that Russia may be signalling its intention to further escalate the conflict. White House Press Secretary Jen Psaki said recent Russian statements have led to concerns it could use “chemical or biological weapons in Ukraine, or to create a false flag operation using them.” Pressure is building on the Biden administration to begin unwinding sanctions on Venezuela after President Nicolas Maduro freed two American prisoners and promised to resume negotiations with his opponents. A plane carrying former US President Donald Trump made an emergency landing in New Orleans on Saturday evening after experiencing an engine failure over the Gulf of Mexico, a source familiar with the matter confirmed yesterday.

Markets

A global equities rebound continued Thursday as dip-buyers leaned into speculation that weeks of market gyrations may have priced in the economic impact of the conflict in Ukraine. Oil steadied after a sharp decline. An MSCI Inc. gauge of Asia-Pacific stocks was on track for its biggest jump since November 2020, up more than 2%. European futures rose. US contracts fluctuated after benchmark indexes in America and Europe notched their strongest single-day gains since 2020. Amazon.com Inc. surged more than 10% in late US trade after announcing a share split and $10 billion buyback plan. The dollar edged higher after sliding on the improved risk appetite, and Japan’s yen neared a five-year low versus the greenback. The 10-year Treasury yield hovered around 1.94%.

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

8:00 a.m. Norway Feb. CPI
9:00 a.m. Czech Republic Feb. CPI
10:00 a.m. Italy Jan. PPI
11:00 a.m.: Greece Feb. CPI
11:00 a.m.: Italy sells bills
12:00 p.m.: Ireland Feb. CPI
1:45 p.m.: ECB rates decision
2:30 p.m.: Lagarde speaks
2:30 p.m.: US Feb. CPI, weekly jobless claims
5:30 p.m.: US to sell 4-week bills, 8-week bills
7:00 p.m.: US to sell 30-year bonds

Corporate Events

Earnings include Oracle, Rivian, JD.com, Hapag-Lloyd, Wheaton Precious Metals, Ulta, Hannover Rueck, DocuSign, Atlantia, Bollore, Sanlam

To learn more about Ballinger & Co., please visit our website or our LinkedIn page.