Morning Report

Friday 28 May, 2021

“Sterling hovered around a three-month high against the dollar, heading for its best month against the dollar amid indications from the Bank of England that market participants should expect an interest rates hike earlier than expected.”

Sam Cornford, Senior FX Dealer


The Biden Administration is set to announce a $6trn budget proposal which will raise wages across the country, in an attempt to fend off rising inflation in the US economy and supply chain shocks. The administration will hope that salary increases will fix a distorted labour market characterized by high unemployment and lots of job vacancies which are not being filled, and that the move will have a stabilizing impact on the economy.

The new leader of Northern Ireland’s most powerful political party has admitted that post-Brexit trading rules could stay in place until at least 2024 and ruled out toppling the region’s government in protest at the regime. Edwin Poots, who was ratified as leader of the Democratic Unionist Party after a three-hour meeting of the party’s executive on Thursday evening, ruled out dramatic actions such as torpedoing the region’s government in protest at a regime that imposes high costs on businesses and strikes a blow to the heart of unionism by creating a customs border in the Irish Sea.


Sterling is weaker against most major currencies. The Chancellor of Exchequer has denied that Greensill Capital capital received any special treatment in securing access to a Bank of England Covid-19 loan scheme. Rishi Sunak defended his department’s actions, refuting the claim that lobbying by David Cameron facilitated ten meetings between the Treasury and Greensill Capital, a supply-chain finance company. The Health Secretary admitted that failures in the country’s Covid-19 testing capacity in the early months of the Covid-19 pandemic, led to elderly patients with coronavirus being released into care homes. It is estimated that 30,000 care home residents died from the virus.


The euro is weaker against the dollar and stronger against the pound in early morning trade. The EU plans for a national recovery fund are shaping up with Brussels set to announce a EUR 750bn post-pandemic recovery fund. The EU budget commissioner, Johannes Hahn, indicated that plans to borrow from capital markets to raise the EUR 750bn required are in progress. Defence Ministers from the twenty-seven European Union Member states will meet in Lisbon for an informal meeting, setting the agenda from the EU’s Common Security and Defence Policy in the year ahead.


The dollar is well bid this morning. Republicans in the Senate took a step towards the White House’s infrastructure plan, raising their offer from $568bn to $928bn as both sides look to establish a consensus. There is still a significant impasse, however, as the President’s previous revision on the infrastructure plan took the total to $1.7bn. The United States has reached the decision not to rejoin the Open Skies Treaty with Russia. The State Department alleged that recent Russian military activity near Ukraine did not represent the actions of a partner committed to confidence-building.


Most Asian stocks rose along with U.S. equity futures Friday after solid economic data. President Joe Biden’s federal spending plans spurred a Wall Street rally in cyclical shares. Treasury yields climbed. Japanese stocks led gains and MSCI Inc.’s Asia-Pacific equity gauge reached its highest close in a month. Chinese shares dropped for the first time this week. Industrial and financial equities fueled a modest increase in the S&P 500, while small-caps outperformed and the tech-heavy Nasdaq 100 slipped. European contracts were in the green.

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

8:00 a.m.: Germany April Import Price Index

8:45 a.m.: France April PPI, consumer spending, May CPI, 1Q GDP

9:00 a.m.: Spain April retail sales

9:00 a.m.: Turkey April trade balance

9:00 a.m.: ECB’s Villeroy speaks

9:30 a.m.: Sweden 1Q GDP

11:00 a.m.: Euro-Area May Consumer, Economic Confidence

11:00 a.m.: Italy sells bonds

12:00 p.m.: U.K. sells bills

2:30 p.m.: U.S. April Wholesale Inventories, Personal Income/Spending

7:00 p.m.: Baker Hughes U.S. rig count

G-7 finance ministers meet online

EU defense ministers meet

Merkel, Draghi, UN’s Guterres speak at Global Solutions Summit

Biden’s fiscal year 2022 budget request

Putin hosts Belarus’s Lukashenko for talks

Corporate Events

Citi Reset Day companywide holiday

Earnings include Meituan

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