Morning Report

November 19, 2021

“With US retail sales beating expectations, surging inflation and bets on rising interest rates, the dollar is set to post a second week of gains against the euro, where central bankers are vowing to hold rates low.”

Tim Hallinan, Trading Director

Main Headlines

The House of Representatives is set to pass Biden’s almost $2 trillion Build Back Better bill today, after the nonpartisan Congressional Budget Office estimated the bill would result in a net increase in the deficit over ten years. The release of CBO’s assessment was as a precursor to the support of several moderate Democrats. Whilst House Minority Leader Kevin McCarthy, delayed the vote on Thursday evening, it is set to pass in the House with a slim majority today. The Bill is a momentous package and would invest billions of dollars in efforts to combat climate change, healthcare provisions for the elderly and education.

The decision to axe HS2 rail improvements to parts of Northern England has continued to generate criticism from Conservative MPs, regional leaders and industry figures, who have expressed concern over long-term disruption and a failure to deliver on promises. A rise in UK consumer confidence, despite surging inflation, has eased economists concerns about spending recovery in the run up to Black Friday and Christmas. Meanwhile, UK public borrowing fell less than expected in October, according to ONS data, reflecting higher interest payments on public debt.


Sterling is well bid against most major currencies this morning. A UK government minister has invested in a tax scheme which is being contested by HM Revenue and Customs. Hundreds of investors, including Lord David Wolfson, invested in the construction of two data centres in Tyneside in 2011 that have since been empty. The scheme generated £134m in tax allowances for the investors who paid £79m, but the tax authorities are seeking to block the allowances. Elsewhere, the UK government has been accused of favouring wealthier households in social care reform after a new cap, of £86,000, on home and care costs was introduced. Sir Andrew Dilnot has warned that anyone with assets of less than £186,000 would be worse off under these changes.


The Euro is weaker against most major currencies in early morning trade. Germany has become the latest European country to ramp up Covid restrictions, announcing the limiting of large parts of public life for people that have not been vaccinated. This comes amidst a rapidly increasing number of Covid cases in the country. Brussels plans to make the EU more attractive to international investors through creating central data bases that hold information on publicly listed companies. The move is set to be announced next week and will make it easier for investors to access information on EU companies and banks.


The Dollar is higher against the Euro and mostly unchanged against Sterling overnight. The North America leaders met at the White House on Thursday, after Mexican and Canadian officials complained that Biden’s plan to offer tax write offs to Americans buying US-made electric vehicles violated international trade laws. At the trilateral meeting, leaders agreed to deepen regional supply chains and to work to expand visas for temporary workers. A bipartisan coalition of state attorneys-general said it is investigating how Instagram affects young users and whether Meta, formerly known as Facebook, violated consumer protection laws.


Treasury yields edged up and a dollar gauge remained on course for a fourth weekly advance. Crude oil, iron ore and copper commodities all pushed higher, whilst gold was little changed. U.S. and European equity futures rose Friday along with most Asian stocks amid optimism that the pandemic recovery can weather elevated inflation and tightening monetary policy. S&P 500 futures rose, as did Nasdaq 100 futures. Nasdaq 100 contracts outperformed after megacap tech helped lift Wall Street to record highs in a choppy session ahead of Friday’s options expiration. China’s stock market led Asian gains, while Japan climbed on confirmation of a stimulus package.  Meanwhile, Hong Kong struggled as Alibaba Group Holding Ltd. sank on a slashed revenue outlook.

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

8:00 a.m.: Norway 3Q GDP

8:00 a.m.: U.K. Oct. retail sales, net borrowing

9:30 a.m.: ECB’s Lagarde speaks in Frankfurt

10:00 a.m.: ECB Euro-area current account

11:00 a.m.: Croatia Oct. unemployment rate

11:00 a.m.: Bloomberg Nov. economic survey for Sweden

11:05 a.m.: Bloomberg Nov. economic survey for Norway

1:00 p.m.: BOE’s Pill speaks in Bristol

2:00 p.m.: ECB’s Weidman speaks in Frankfurt

4:45 p.m.: Fed’s Waller discusses economic outlook

6:15 p.m.: Fed’s Clarida discusses global monetary policy coordination

7:00 p.m.: Baker Hughes U.S. rig count report

Sovereign debt ratings: Denmark, Switzerland, Greece, Malta, Albania, Slovakia, Latvia, Lithuania

EU Justice Commissioner Reynders visits Warsaw amid the escalating judicial row between Poland and the bloc

Corporate Events

Earnings include Foot Locker, CNP Assurances, Tatneft


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