Morning Report

Morning Report – Wednesday 13th May

Main Headlines

U.K. Chancellor of the Exchequer Rishi Sunak said the government will help pay the wages of millions of workers for another four months. Extending the state furlough program by four months could add an extra £35 billion to the cost of the program, bringing the total to as much as £84 billion.

The ECB isn’t “Master of the Universe” and shouldn’t pretend otherwise. So said Peter Huber, the German judge who drafted the constitutional court opinion questioning the bank’s QE program. It merely wants to see accountability and an explanation for those hurt by it, he told Sueddeutsche Zeitung. ECB Chief Economist Philip Lane told Telegraaf the asset buying is “proportionate” and will end “as soon as the inflation aim is reached.”

European stock futures fell after Wall Street slumped on warnings and downbeat comments from Anthony Fauci and regional Fed chiefs. Markets in Asia were mixed, where India jumped after the government announced a stimulus package equal to 10% of their GDP. Treasuries gained, while gold was little changed. The Kiwi plunged after the central bank expanded its QE program and said negative policy rates may be on the horizon. Oil fell.

The U.K. government set out plans to reopen the housing market from today. A change in the rules could allow estate agents to open, permit viewings of properties and let house moves take place. House builders will also be able to negotiate flexible hours with councils.


U.K. retail sales dropped in April by the most in more than quarter of a century, according to statistics. The British Retail Consortium said total sales fell 19.1% in April y/y, the most since its monitor began in 1995. The Treasury is mulling tax hikes and spending cuts to fund Britain’s increased debt as it copes with the pandemic, the Telegraph reported. The pound is holding small gains this morning after a several pieces of U.K. economic data came in better than expected. Monthly growth data for March showed the U.K. economy shrank 5.8%, less than the -7.9% forecast. Similarly, March industrial production slipped 4.2% month-on-month, estimated at -5.6%.


Angela Merkel and Emmanuel Macron are ironing out the details after agreeing to reopen the German-French border. The outbreak of the coronavirus and containment measures imposed throughout the region since mid-March have battered euro-area economies and created levels of uncertainty in the region not seen since the inception of the euro. This is reflected in the currency which is trying to consolidate but is still weak.


Pandemic relief efforts in the U.S. blew the budget deficit out to a record $738 billion in April. Government spending rose 161% on year to almost $980 billion, while receipts fell 55% partly because the Trump Administration delayed the tax-filing and payment deadline to July 15. The shortfall for the first seven months of the fiscal year came to $1.48 trillion. Federal Reserve Bank of Cleveland said that there was a consensus at the central bank prior to the coronavirus crisis that negative interest rates would not work well in the U.S. The dollar held gains on increased concerns that relaxing virus lockdowns too early will lead to a resurgence in cases and derail any recovery.

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

  • 7:00 a.m.: U.K. 1Q GDP, March industrial production, trade
  • 8:00 a.m.: Turkey March current account
  • 10:00 a.m.: Euro-Area March industrial production
  • 1:30 p.m.: U.S. April PPI
  • 3:30 p.m.: EIA Crude Oil Inventory Report
  • Germany’s Merkel updates lawmakers on the pandemic
  • OPEC Monthly Oil Market Report

Corporate Events

Earnings include Maersk, Verbund, Deutsche Wohnen, Terna, Cisco, Tencent, Sony, Rakuten

Corporate Highlights

  • Deutsche Bank is restarting job cuts and top management has renounced a month’s pay.
  • PNC raised about $14 billion after selling its stake in BlackRock at $420 per share. The transaction will generate a $140 million for its bankers, representing about 1% of the deal size.
  • ABN Amro reported its first quarterly loss since 2013 as it set aside 1.1 billion euros for soured loans.