Morning Report

Morning Report – Wednesday 5 May

Main Headline

US Treasury Secretary Janet Yellen warned yesterday that interest rates may need to rise over time to keep the US economy from overheating, exacerbating a sell-off in technology stocks before she clarified her remarks later in the day. She made these comments in the context of the Biden administration’s plans for $4tn of infrastructure and welfare spending over the next decade, rather than the $1.9tn economic stimulus already enacted this year because of the pandemic. Corporate America’s campaign to defend voting rights has moved on to Texas, with dozens of companies including Microsoft, HP and Salesforce calling on local officials to oppose changes that would restrict eligible voters’ access to the ballot.

Brussels is moving towards granting the UK’s drivers an exemption from having to carry additional paperwork when they travel to Europe, in a step likely to be welcomed by British holidaymakers eyeing summer holidays on the continent. The EC is consulting with EU national governments on granting the UK a waiver so that drivers would not need to carry a proof-of-insurance document known as a “green card” when they travel to the 27-country bloc, according to EU officials. The UK government is to step up its efforts to fight coronavirus variants by doubling the capacity of its Porton Down laboratories to test vaccines against new strains with a £30m investment in new labs.


The pound is well bid against most majors in the early morning trade. UK mortgage lending rose by the highest monthly amount on record in March, driven by a “frenzied rush” of people seeking to buy property ahead of the expected ending of the stamp duty holiday. The measure was extended to the end of June in the March Budget – exempting buyers from paying the tax on the first £500,000 of the residential property purchase in England and Northern Ireland. Net mortgage borrowing was £11.8bn in March, the strongest since records began in April 1993, according to data published on Tuesday by the Bank of England.


The euro is slightly lower than the pound and the dollar this morning. Poland’s lower house of parliament has approved EU borrowing plans to finance the bloc’s €750bn pandemic recovery fund, despite deep divisions over the proposal in the ruling conservative-nationalist coalition. The recovery fund is the central plank of the EU’s efforts to repair the huge damage to its members’ economies caused by the impact of Covid-19, but the aid cannot be disbursed until all the bloc’s 27 states have ratified an increase in the EU’s so-called “own resources” that will finance it.


The dollar is stronger than the euro but weaker than the pound overnight. Goldman Sachs told its bankers in the US and UK on Tuesday that they should be ready to return to the office next month, as the two countries loosen restrictions in response to falling Covid-19 cases. US staff were asked to be ready to report to the office by June 14, while UK employees will be called back one week later on June 21, according to an internal memo. In other parts of the world where more progress in combating the coronavirus pandemic has been made, like the Asia-Pacific region, the bank’s offices are nearly full with returnees.


U.S. equity futures rose and Asian stocks were steady Wednesday after markets dipped overnight on a technology selloff and Treasury Secretary Janet Yellen’s comments on interest rates. The dollar slipped. S&P 500 contracts advanced after gains in the commodity, financial and industrial sectors helped the benchmark index pare losses. Nasdaq 100 futures also rallied following a weaker close for the index that owed largely to declines in the likes of Apple Inc., Tesla Inc. and Inc. Australian shares rose and Hong Kong fluctuated. Markets in Japan, China and South Korea are shut for holidays. Gold was up 0.1% to $1,780.88 an ounce.

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

8:30 a.m.: Switzerland April CPI

9:00 a.m.: Spain April Unemployment

9:15 a.m.: Spain April Services, Composite PMI

9:45 a.m.: Italy April Services, Composite PMI

9:50 a.m.: France April Services, Composite PMI

9:55 a.m.: Germany April Services, Composite PMI

10:00 a.m.: Euro-Area April Services, Composite PMI

11:00 a.m.: Euro-Area March PPI

11:00 a.m.: U.K. sells bonds

11:30 a.m.: Germany sells bonds

12:30 p.m.: U.K. sells bonds

3:45 p.m.: U.S. April Services, Composite PMI

4:00 p.m.: ECB’s Lane speaks

4:30 p.m.: EIA Crude Oil Inventory Report

Poland Rate Decision

EU-U.S. Future Forum

Corporate Events

Earnings and sales updates include Intesa Sanpaolo, Stellantis, Novo Nordisk, Maersk, Vestas, Siemens Energy, ITV, PayPal, Uber, Booking, GM

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