Morning Report

May 30, 2023

“The US and UK markets resume their activities after the extended weekend this morning, displaying a mixed sentiment of uncertainty. Investors anticipate further information and a clearer understanding of the preliminary agreement in Washington, which aims to temporarily suspend the federal debt ceiling of $31.4 trillion until January 2025.”

Tim Hallinan – Trading Director

Main Headlines

Washington is preparing for a challenging week of negotiations to finalize the debt ceiling agreement after US lawmakers and the White House reached a last-minute deal over the weekend to avoid a potential default within a few days. The House rules committee will review the bill on Tuesday afternoon, which will determine the framework for considering the legislation. This task may prove difficult since the panel includes several Republicans who may attempt to obstruct it. The bill’s first major test is expected to be a vote in the House tomorrow, with Senate votes likely to follow over the weekend.

According to new sector data, shop price inflation in the UK reached its highest level in at least 18 years in May, despite a slight easing in the pace of food price growth. The cost of shop items increased by 9 percent annually last month, up from 8.8 percent in April. This marks the fastest rise since records began in 2005, as reported by the trade body, the British Retail Consortium. However, food inflation slightly slowed to 15.4 percent in May, down from the all-time high of 15.7 percent the previous month. The increase in consumer prices has been driven by escalating energy and food prices globally, which accelerated after Russia’s invasion of Ukraine in February 2022.


Sterling is stronger against euro and weaker against the dollar this morning. Labour in the UK is developing plans to compel landowners to sell plots at a significantly reduced price compared to their potential market value. This initiative aims to reduce home-building costs in England. Lisa Nandy, the shadow levelling-up secretary, intends to reform the valuation of land when acquired by councils through “compulsory purchase orders” if Labour wins the next general election. Meanwhile, the NHS in England faces challenges in improving productivity due to record waiting lists. Simply increasing staff numbers is insufficient to transform its performance as issues such as outdated infrastructure, a sicker population, and a reliance on less experienced staff hinder the health service’s efforts to treat more patients than before the pandemic.


Euro is weaker than most major currencies in the early morning trade. Following Recep Tayyip Erdoğan’s re-election, Turkey’s lira weakened, and analysts are warning about the upcoming test for the victorious president in addressing the country’s unstable $900 billion economy. Many economists argue that Erdoğan’s policies of low interest rates and emergency measures to support the currency are unsustainable as Turkey’s currency reserves rapidly decline. In several European countries, power prices in the wholesale energy market have dipped into negative values during daylight hours. The Swiss economy grew by a faster than expected rate at the start of the year, supported by robust domestic demand and rising exports.


The dollar is well bid against most major currencies this morning. The US House rules committee will hold a hearing on the debt pact today, a day before the entire body votes on it. The White House and GOP congressional leaders are intensifying their lobbying efforts for its passage. The ability of Joe Biden and Kevin McCarthy to reach a compromise is likely to impact their political standing. The White House claims that the caps will reduce spending by approximately $1 trillion over a decade, while the GOP argues that the reduction is twice that amount. The head of Goldman Sachs’s private equity business in Asia has stated that she has stopped trying to raise money in the US due to geopolitical tensions between Washington and Beijing. US retailers are sounding the alarm about a surge in thefts, as they implement additional security and surveillance measures to outsmart organized criminals.


Treasuries and US stock futures advanced on hopes that Congress will pass a debt-accord to head off a default as White House and Republican congressional leaders stepped up lobbying in support of the deal. Treasury yields fell across the curve on debt dated from five years to 30 years. Yields on short-dated Treasury bills – the most at risk of a default – were indicated lower in early trading as they extended a decline from recent highs.

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

8:00 a.m.: Sweden 1Q GDP
9:00 a.m.: Riksbank hearing on monetary policy
9:00 a.m.: Spain May CPI
9:00 a.m.: Switzerland 1Q GDP
9:00 a.m.: Czech Republic 1Q GDP
9:00 a.m.: Turkey April Trade Balance
10:00 a.m.: Euro-area April M3 Money Supply
11:00 a.m.: ECB’s Simkus speaks
11:00 a.m.: Euro-area May Consumer, Economic Confidence
3:00 p.m.: ECB’s Holzmann speaks
3:30 p.m.: ECB’s Centeno speaks
5:45 p.m.: ECB’s Villeroy speaks
Panama Canal draft limit on Neo-Panamax vessels set to decline due to drought

Corporate Events

Earnings include Nacon, HP


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