Morning Report

Morning Report – Tuesday 30th June

Main Headlines

Prime Minister Boris Johnson will set out his plan to spend the British economy out of its coronavirus-induced crisis, with a speech on Tuesday promising to fast-track 5 billion pounds of infrastructure investment.

Jerome Powell called the U.S. economic outlook “extraordinarily uncertain” due to a pandemic that must be contained to ensure a recovery. The recent rebound in activity is welcome but “also presents new challenges – notably, the need to keep the virus in check,” the Fed chair said in prepared remarks before he and Steve Mnuchin testify in the House today. Hiring and spending are picking up, he noted, but a full rebound isn’t likely until people feel safe resuming a range of activities. The WHO warned the “worst is yet to come” given a lack of global solidarity.

U.S. and European futures rallied and Asian equities headed for their best quarter since 2009, fuelled by upbeat Chinese manufacturing data. Benchmarks in Tokyo and Seoul rose more than 1%, while gains for Hong Kong shares were more modest after the passage of a national security law. Treasuries slipped with the yen. Gold was steady and oil dropped.


The pound remains under pressure as worries surface about a blowout British spending spree. Sterling is around one month lows as concerns about how Britain’s government will pay for its planned infrastructure program following Prime Minister Boris Johnson’s promise to increase spending. “This is the moment for a Rooseveltian approach to the UK,” Johnson told Times Radio on Monday, referring to former U.S. President Franklin D. Roosevelt’s “New Deal” programme, which included massive public works projects to help the United States recover from the Great Depression.


The ECB has the support of a broad coalition in German parliament. Angela Merkel’s bloc partners, as well as the Greens and the Liberal Democrats, have agreed on a draft motion to back the central bank’s bond-buying program, people familiar said. It will still need to be accepted by the party caucuses and get a parliamentary sign-off, but the agreement is likely to end a standoff over QE that was triggered by the country’s constitutional court last month.


Safe haven currencies were on the backfoot this morning as hopes of an economic turnaround boosted riskier assets. Spurring fresh optimism on the U.S. economy was pending home sales data, which showed that housing market activity had quickly recovered in May from a plunge triggered by the pandemic.

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

7:00 a.m.: U.K. 1Q GDP
7:45 a.m.: France June CPI, May PPI, consumer spending
8:00 a.m.: Turkey May trade balance
8:00 a.m.: Spain 1Q GDP
10:00 a.m.: Italy, Euro-Area June CPI
11:00 a.m.: U.K.’s Haldane speaks
12:00 p.m.: ECB’s Schnabel speaks
3:00 p.m.: BOE’s Cunliffe speaks
4:00 p.m.: ECB’s Guindos speaks
5:00 p.m.: EIA releases 914 production report
5:30 p.m.: Fed’s Powell testifies