Morning Report

November 18, 2022

“The UK Fiscal Statement pointed to a gloomy outlook for Britain yesterday, with the Office for Budget Responsibility (OBR) confirming a UK recession and estimating a 1.4% contraction in the economy in 2023. The pound moved modestly lower on the back of the announcement, however rebounded in early trading this morning. The greenback edged higher on the other hand, supported by hawkish comments from Fed’s Bullard. Additionally, ECB’s President Lagarde pointed to further interest rate hikes to tackle inflation in the eurozone.“

Sam Cornford, Partner – Head of Trading


Main Headline

Nancy Pelosi has said she will not run again to be Democratic leader in the House of Representatives, after nearly two decades in the role. The veteran politician lost the speakership after the Republicans took the House in the recent midterm elections. Despite saying she would step down from the role she has held since 2003, Mrs Pelosi said she would continue to represent San Francisco in the House, as she has done for 35 years. The 82-year-old has served as speaker twice during her time in Congress and was the first woman to take the role when she was elected in 2007.

British retail sales increased in October but remain below pre-pandemic levels as the soaring cost of living hits households, official figures show. Sales volumes rose by 0.6% following a 1.5% drop in September, according to the Office for National Statistics. The rebound followed weak sales in September when shops were open for fewer hours or closed for Queen Elizabeth II’s funeral. But economists suggested the latest uptick in sales will not continue. The UK’s inflation rate hit 11.1% in October, the highest for 41 years, and the government has said the country is in an economic recession.



Sterling is well bid against most major currencies overnight. The UK government yesterday unveiled a sweeping £55 billion ($66 billion) fiscal plan as it seeks to plug a gaping hole in the public finances and restore Britain’s economic credibility, even as the country teeters on recession. Finance Minister Jeremy Hunt, in his hotly anticipated inaugural Autumn Statement, outlined around £30 billion in spending cuts and £25 billion in tax hikes. The chancellor says his priorities are stability, growth, and public services, and is providing “fair solutions” despite taking “difficult decisions”.



Euro is stronger against the dollar and weaker against sterling this morning. The European Central Bank will keep raising interest rates and may even need to restrict economic activity to tame inflation, ECB President Christine Lagarde said this morning, singling out rates as the bank’s key instrument over balance sheet reduction. The ECB has raised rates by an unprecedented 200 basis points since July to tackle inflation and said that more policy tightening is coming via rate hikes and the reduction of its 5 trillion euro ($5.2 trillion) debt holding.



The dollar is weaker than most major currencies in the early morning trade. St. Louis Federal Reserve President James Bullard said yesterday the central bank still has a lot of work to do before it brings inflation under control. Recent data has indicated the pace of inflation could be slowing. The consumer price index for October increased 0.4%, below market expectations, and the annual pace is down to 7.7%, off the 41-year high reached in the summer but still well above the Fed’s 2% target. Bullard’s remarks follow statements from multiple other Fed officials expressing the need to keep up the heat against inflation, though several said policymakers could ease up a bit from the level of recent increases. Bullard suggested that the terminal federal funds rate could reach the 5% to 7% range, higher than the market is currently pricing.


European markets were modestly higher this morning as investors continue to assess the trajectory of monetary policy after some tough statements from US Federal Reserve officials. The pan-European Stoxx 600 was up 0.4% in early trade, with utilities climbing 1.4% to lead gains as most sectors advanced. Tech stocks fell 0.6%. US stock futures were mixed in early premarket trade as investors weighed the prospect of higher interest rates, and shares in Asia-Pacific were also uncertain, as Japan’s core consumer price index for October rose at its fastest annual pace in 40 years.


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

8:00 a.m.: UK Oct. Retail Sales
8:00 a.m.: Norway 3Q GDP
9:30 a.m.: ECB’s Lagarde speaks
2:00 p.m.: ECB’s Nagel speaks
2:15 p.m.: ECB’s Knot speaks
2:15 p.m.: BOE’s Mann speaks
6:15 p.m.: BOE’s Haskel speaks
COP27 ends today


Corporate Events

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