Morning Report

Morning Report – Monday 8 March

Jon Robson, Head of Trading

“The dollar is near three-month highs this morning after the U.S. Senate passed the stimulus bill which sparked another sell-off in the bond market. Currencies of major commodity exporters, in the meantime, retreated as risk-on trade lost momentum.”

Main Headlines

The US Senate passed a $1.9 trillion coronavirus relief package Saturday, capping off a marathon overnight session after Democrats resolved internal clashes that threatened to derail President Joe Biden’s top legislative priority. Since the Senate made amendments to the bill before passing it, the House of Representatives will have to vote on it again. The watering down of jobless benefits in particular, imposed by Democratic Senator Joe Manchin, could prove problematic for the fate of Biden’s bill once it returns to the House, where Democrats hold a slim majority and cannot afford more than a handful of defections among progressive lawmakers.

UK Prime Minister Boris Johnson is facing a growing backlash against his proposed 1 per cent pay increase for NHS staff — including the threat of strikes by nurses — in the first test of his commitment to post-pandemic fiscal discipline. UK nurses’ leaders said they were preparing for possible industrial action after denouncing what they called a “pitiful” pay rise for workers including staff fighting the coronavirus pandemic. Johnson has defended the 1 per cent cap, saying the government has tried to give NHS workers “as much as we can at the present time”.


Sterling is weaker against the dollar and stronger against the euro this morning. Schools could be ordered to introduce a five-term year or longer school days to make up for lost time during the pandemic, education secretary Gavin Williamson said as children in England prepared to return to their classrooms on Monday. The minister said in an interview on Sunday that he wanted a “transformative” reform to the system in the wake of the Covid-19 crisis, which forced the closure of schools and the adoption of remote learning for most pupils. However, education leaders warned such measures risked distracting from less headline-grabbing but more effective catch-up interventions, such as improvements in teaching.


The euro is lower against other majors overnight. German chancellor Angela Merkel’s centre-right bloc has been rocked by scandal after two of its MPs announced they were resigning following disclosures that they had personally profited from government deals to procure coronavirus face masks. The announcements risk damaging the party ahead of two important regional elections next Sunday in the western states of Baden-Württemberg and Rhineland-Palatinate. The polls are seen as a critical test for Armin Laschet, the new leader of Merkel’s party, the Christian Democratic Union, who was only elected in January and is still seeking to stamp his authority on the party.


The dollar made gains against most major currencies in early morning trading. The US economy created 379,000 jobs in February, pointing to a sharp rebound in the country’s labour market amid a rapid decline in coronavirus cases nationwide. The increase in employment last month was more than double its pace in January, when the economy created 166,000 jobs after shedding 306,000 positions during the pandemic’s winter surge in December.


Most Asian stocks fell alongside U.S. equity futures Monday as higher Treasury yields tempered optimism over President Joe Biden’s $1.9 trillion pandemic relief plan and the economic growth outlook. Crude oil jumped. Tech shares slid and China led the regional retreat with the CSI 300 tumbling some 3%. Nasdaq 100 futures underperformed while European contracts pointed higher. Ten-year Treasury yields ticked up along with the dollar. U.S. stocks had rebounded Friday and the 10-year yield touched 1.6% after jobs data beat estimates. Oil surged after Saudi Arabia said the world’s largest crude terminal was attacked, though output seemed to be unaffected.

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

8:00 a.m.: Germany Jan. Industrial Production

9:00 a.m.: Spain Jan. Industrial Production

10:30 a.m.: Euro-Area March Sentix Investor Confidence

11:00 a.m.: BOE’s Bailey speaks

11:30 a.m.: Germany sells bills

2:50 p.m.: France sells bills

International Women’s Day

Schools in England reopen

Corporate Events

Earnings include Phoenix Group, Pearson, Direct Line, Vermilion Energy

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