Morning Report

Morning Report – Monday 25th January

Jon Robson, Head of Trading

“Dollar bond yields remain on a steep upward trajectory and the prospect of fiscal stimulus boosts outweighs growing coronavirus fears. Even concerns over the potential repeat of the 2013 “taper tantrum” are unlikely to stand in the way of the Fed’s stimulus plans at this point.”

Main Headlines

Democrats in U.S. Congress have said they want a deal on President Biden’s $1.9tn stimulus plan before taking up Donald Trump’s impeachment trial in the Senate. Given the Republican scepticism, Democrats want to quickly gauge Republicans’ appetite for serious negotiations on the package or move to pass it only with lawmakers of their own party.

The U.K. is considering tightening controls at its borders to prevent the import of new strains of coronavirus, which it fears may undermine the success of its vaccination program. Health Secretary said the UK has identified 77 cases of the coronavirus variant first detected in South Africa.


The British pound held firm, not far off a 2-1/2-year high touched on Thursday.

British Prime Minister Boris Johnson said on Friday there was evidence a new variant of COVID-19 discovered late last year could be associated with higher mortality. Pressure grows on the Government to reopen schools amid warning children are pandemic’s ‘forgotten victims’.


The euro was little changed, taking a pause after last week’s gain. Economic activity in the euro zone shrank markedly in January as stringent lockdowns to contain the COVID-19 pandemic hit the bloc’s dominant service industry hard.

Italy’s main ruling parties on Friday flagged snap elections as the only way out of its political impasse, if Prime Minister Giuseppe Conte fails to drum up a parliamentary majority after scraping through a confidence vote.


The U.S. dollar stabilised on Monday after a recent decline before dipping in Asian trading.

Federal Reserve Chair Jerome Powell is expected to signal he has no plan to wind back the Fed’s massive stimulus any time soon when the central bank concludes its policy review on Wednesday. Bets against the dollar have become overcrowded, according to analysts, with U.S. data on Friday showing net dollar short positions swelling to the largest since May 2011.


Asian stocks, U.S. and European equity futures rose Monday as investors focused on the prospect of additional fiscal stimulus and supportive Federal Reserve policy amid the worsening pandemic. Stocks outperformed in South Korea and Hong Kong though Japanese shares were little changed. U.S. futures pointed higher, with Nasdaq 100 contracts leading gains ahead of a slew of tech earnings reports this week. The S&P 500 slipped Friday on sobering virus trends. Treasury yields edged up. Oil and gold were steady.

Main Economic Data/Central Banks/Government (All times GMT)

9:45 a.m.: ECB’s Lagarde gives keynote at green banking event
10:00 a.m.: Germany Jan. IFO Survey
11:30 a.m.: Germany sells bills
11:45 a.m.: ECB’s Panetta speaks
2:00 p.m.: ECB’s Lane speaks (then again at 2:45 p.m.)
2:45 p.m.: ECB’s Elderson in EU Parliament hearing
2:50 p.m.: France sells bills
3:45 p.m.: ECB’s Weidmann speaks
5:15 p.m.: ECB’s Lagarde speaks
6:00 p.m.: BOE’s Bailey speaks

Turkey and Greece hold exploratory talks

Climate Adaptation Summit

WEF’s Davos Agenda starts