Morning Report

November 23, 2021

“After Powell’s renomination for Fed Chair, financial markets buffeted, and the dollar hit a new four-and-a-half-year top on Tuesday. The news reinforced market expectations of rate rises next year when the central bank finishes tapering its emergency bond buying programme.”

Tim Hallinan, Trading Director

Main Headlines 

In a decision which signals continuity in US economic policy, Joe Biden has nominated Jay Powell to serve a second term as chair of the Federal Reserve. The decision comes amidst a patchy labour market recovery and continuously high inflation, which Powell has vowed he would fight. Additionally, there is belief in the White House that Powell will more easily win the Senate confirmation for their social spending and climate legislation. His main competitor, Fed governor Lael Brainard, was nominated for vice president, much to the dismay of progressive democrats who encouraged the President to pick Brainard.

Despite a rebellion from backbenchers, Boris Johnson’s social care amendment, which will disproportionately hit poorer pensioners, was voted through in the Commons yesterday. The change means that lower-asset households will have to pay the same as richer people if they need longer term care. It would save the government £900m a year by 2027, but would leave many poorer homeowners exposed to “catastrophic costs” including the need to sell their homes to fund care, according to experts. Despite Jonson arguing the new proposals were ‘much more generous than any previous system,’ Sir Andrew Dilnot, the original architect for social care reform, warned that the changes leave a significant hole in the proposals.


The pound is lower than most majors this morning. Recent figures released from property agent Savills, highlight how the stamp duty holiday amounted to a £6.4bn tax break for home buyers in England. It was introduced in July 2020 to boost the housing market after pandemic restrictions were lifted. Savills’ analysis highlights half the savings benefited those who bought properties over £500,000. The big losers of the holiday have been first-time buyers, who encountered intense competition where previously they had enjoyed a specific stamp duty tax break of their own. House prices jumped 13.2% over the year to June 2021, according to the Office for National Statistics — the highest annual UK growth rate since November 2004.


The euro is well bid against most majors overnight. The EU’s ambition to encourage retail investing in Europe will be dealt a big blow if authorities ban brokers from selling customer orders on to market makers, one of the region’s largest stock-trading apps has warned. Known as payment for order flow, the practice has come under intense scrutiny as the volatility unleashed by the pandemic drew more retail investors into financial markets. Banning the practice would “likely lead to higher prices for consumers, spreads that are worse and exchanges that are going to make more money,” said Christian Hecker, chief executive of Trade Republic, “This would hurt low income investors. It’s the opposite of what is intended.”


The dollar is weaker than the euro and stronger than the pound in the early morning trade. The US Labour Department announced on Monday that they are raising the minimum wage from $10.95 to $15 an hour for Federal Contractors, in changes that will take place in January. The rule could impact everyone from janitors to child-care workers and officials state around 327,000 contractors could see their wage change under the rule. “Federal contract workers are essential workers and are critical to the federal government,” said Labor Secretary Marty Walsh. “It’s a step in the right direction and it also ensures the federal government leads by example.”


US futures fell amid a jump in Treasury yields and the dollar as Jerome Powell’s renomination to head the Federal Reserve fueled bets on a quicker reduction of monetary stimulus. Nasdaq 100 contracts underperformed after a Wall Street technology selloff hurt U.S. shares and Treasuries slid, with markets pricing in a full quarter-point rate hike into the June Fed meeting. The dollar was around the highest since September 2020, while the yen fell past 115 per dollar for the first time since 2017. Asian stocks were mixed Tuesday, while in Hong Kong, a gauge of Chinese tech stocks dropped on speculation over stiffer regulations. Oil retreated ahead of an expected announcement by the U.S. on a coordinated release of reserves. Bullion pared a slump.

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

9:15 a.m.: France Nov. manufacturing, services PMI
9:30 a.m.: Germany Nov. manufacturing, services PMI
10:00 a.m.: Euro-area Nov. manufacturing, services PMI
10:30 a.m.: U.K. Nov. manufacturing, services PMI
12:00 p.m.: BOE’s Haskel speaks
3:45 p.m.: U.S. Nov. manufacturing, services PMI
4:00 p.m.: BOE’s Bailey and Cunliffe speak at House of Lords on digital currencies
6:30 p.m.: ECB’s Makhlouf speaks at Irish parliamentary committee
7:40 p.m.: ECB’s Guindos speaks
API report on U.S. oil inventories
IAEA meeting
EU general affairs council meeting in Brussels

Corporate Events

Earnings include: Medtronic, Analog Devices, Autodesk, Compass Group, Xiaomi, VMware, Dell, HP Inc, Dollar Tree, Best Buy, American Eagle Outfitters, Dick’s Sporting Goods.


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