Morning Report

21 June, 2021

“The global financial markets have been driven by the Fed’s hawkish dot plots and that is unlikely to change this week. The dollar gains have somewhat tempered since Friday’s peak. While the greenback could climb even further, the gains will not be sustained for long, with other central banks inevitably bound to consider normalising their policy too.”

Sam Cornford, Partner & Head of Trading

Main Headlines

A tight labour market within the US economy is giving leverage to low-wage workers across the leisure, hospitality, retail, transportation and manufacturing sectors. As the US economy continues to recover, job openings are increasing across the labour markets. A shrinking labour force means low-wage workers are reaping benefits normally reserved for white collar workers, including bonuses, salary increases and competing offers. Since February 2020 to the present day, average weekly wages in leisure and hospitality are up 10.4%, whilst average weekly wages in the retail sector are up around 8.5%, according to Labor Department data.

Almost half of London companies whose staff can work from home expect them to do so up to five days a week after the pandemic finishes, and smaller businesses are more likely than larger ones to move ahead with remote working. A poll of 520 business leaders by the London Chamber of Commerce and Industry also found that slightly more companies said employees’ main reason for concern about returning to the office was the risk of contracting Covid-19 when commuting, rather than at the office.


Sterling is lower versus the dollar and largely unchanged versus the euro in the early morning trade. The HS2 high-speed railway project has increased in cost by £1.7bn during Covid-19 as a result of decreased productivity due to social distancing measures. Costs have also risen at other infrastructure projects across the UK, including Hinkley Point C nuclear plant and Crossrail. Meanwhile, UK house price growth slowed in June as record prices and a lack of properties to purchase drained momentum from the market.


The euro is lower against most majors overnight. In Germany, Armin Laschet, the leader of the Christian Democratic Union has warned that the EU is best served by a cautious approach towards China. Laschet is the frontrunner to replace Angela Merkel as Chancellor, yet the pair agree that the EU must engage with China as both a partner and a rival. At regional elections in France, Marine Le Pen’s far-right Rassemblement National party performed poorly receiving less than 25% of the vote in early polling predictions. A poor result for Le Pen will give confidence to Emmanuel Macron, who expects to face her in the presidential elections in 2022.


The dollar is stronger against other major currencies overnight. The United States delivered 2.5mn doses of the Moderna Covid-19 vaccine to Taiwan, having initially pledged around 800,000 jabs to the country. The US Department of Homeland Security has extended closure of borders with Canada and Mexico for all non-essential travel until July 21 at the earliest. This move is to reduce the spread of Covid-19 variants, following Canada’s decision to shut the border with the United States.


Stocks slid Monday and longer-term Treasury yields fell. Japan led the Asian equity weakness, with the Nikkei 225 down as much as 4%, while European and U.S. stock futures declined. The 30-year U.S. Treasury yield retreated below 2% for the first time since February, as the prospect of less accommodative monetary policy buffeted markets. Gold stabilized after slumping last week. Oil climbed to about $72 a barrel as talks between world powers and Iran dragged on, potentially delaying the return of the latter’s energy exports.

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

11:30 a.m.: Germany sells bills

2:30 p.m.: ECB’s Lagarde speaks

2:50 p.m.: France sells bills

4:15 p.m.: Lagarde addresses European Parliament

Bloomberg’s Qatar Economic Forum

Corporate Events

Earnings include Prosus

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