May 15, 2023

“Today’s focus is on the US and UK markets. Investors await the Empire State Manufacturing Index, a reliable indicator of the US economy, as well as the Bank of England’s Chief Economist’s remarks on the Monetary Policy Report as both carry significance for future monetary decisions.”

Tim Hallinan – Trading Director

Main Headlines

President Joe Biden announced on Sunday that he anticipates a meeting with congressional leaders on Tuesday to discuss a plan to increase the nation’s debt limit and prevent a detrimental default. Speaking in Delaware, Biden expressed optimism about reaching an agreement. Originally scheduled for Friday, the meeting with lawmakers was postponed. President Biden appointed Philip Jefferson as the vice chair of the Federal Reserve, replacing Lael Brainard. Adriana Kugler, the U.S. executive director at the World Bank, was also nominated as a Fed governor, providing expertise in labour economics. They will join the central bank’s leadership team in evaluating the potential for interest rate increases and addressing the challenges of a strong job market, which some, including Chair Jerome Powell, believe could contribute to inflation.

Around 1.6 million British households will soon experience an average surge of £2,300 when their fixed-rate mortgages expire in the coming year, according to a recent report by the Resolution Foundation. Out of the 7.5 million households with mortgages, only about half have observed a change in their mortgage rates since the Bank of England initiated interest rate hikes in December 2021. In other news, the FTSE 100 started the day on a positive note, supported by the rise in lenders and precious metal miners. However, John Wood Group, a mid-cap oilfield services and engineering firm, experienced its worst day ever as Apollo Global withdrew from a potential deal.



Sterling is well bid against most major currencies overnight. Today, The Conference Board Inc. will release the CB Leading Index, which evaluates various economic factors to forecast the economic direction. It considers production, new orders, consumer confidence, stock prices, and interest rate spreads. While its impact is usually muted due to previously released indicators, the projected index number of -0.8% suggests favourable market conditions compared to past releases. Later today, the Chief Economist of the Bank of England will address the Monetary Policy Report at a virtual event hosted by the BoE. This speech is eagerly awaited as it may provide insights into the bank’s future responses to the prevailing market conditions.



The Euro is stronger against the Dollar and weaker against Sterling this morning. According to sources in Brussels, the European Commission will predict Germany’s economic growth for this year at 0.2% and forecast a 1.2% rate for Italy, as reported by Italian daily La Stampa. The Commission is set to release its spring forecasts on Monday at 0900 GMT. Germany’s projected 0.2% GDP increase aligns with the Commission’s previous forecast from February but is less optimistic than Berlin’s recent projection of 0.4% made last month. During the day, several Eurogroup meetings will be held in Brussels, providing updates on important matters. As the group oversees policy coordination among the 19 Euro area member states, their decisions and initiatives can significantly impact the economic well-being of the Eurozone. Although these meetings are closed to the press, officials typically engage with reporters throughout the day.



The Dollar is weaker than most major currencies in the early morning trade. The New York Fed will release the Empire State Manufacturing Index later today. This report, based on a survey of approximately 200 manufacturers in New York state, serves as a leading indicator of economic well-being. Respondents rate the overall level of business conditions. The current forecast stands at -3.7, but recent months have shown mixed results compared to the forecast. It remains to be seen the way the trend will continue, although it’s worth noting that this is the highest projected figure since December, which is a positive sign.



Stocks moved broadly higher as investors looked for progress in Washington debt-ceiling talks and cheered a bout of M&A news. The Stoxx 600 climbed 0.2%, led by consumer and resource shares. Contracts on the S&P 500 rose by about 0.3%, suggesting stocks will continue to trade in their recent narrow range. President Joe Biden, House Speaker Kevin McCarthy and other congressional leaders are planning to meet on Tuesday.


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

7:00 a.m.: Finland April CPI
8:00 a.m.: Germany April Wholesale Price Index
8:00 a.m.: Sweden April CPI
10:00 a.m.: Turkey April Central Government Budget Balance
10:30 a.m.: Italy March Government Debt
11:00 a.m.: Euro-area March Industrial Production
11:00 a.m.: EU Commission Economic Forecasts
11:30 a.m.: Germany to sell bills
2:30 p.m.: US May Empire State Manufacturing Survey
6:00 p.m.: BOE’s Pill speaks
German Chancellor Olaf Scholz speaks
Arab League Summit


Corporate Events

Earnings include Porsche, Taqa, Siemens Energy, TPG, XP
Microsoft’s takeover of Activision is set for European Commission approval.


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