Morning Report

October 27, 2021

“Ahead of its monetary policy meeting on Thursday, the ECB is expected to slow it’s tightening of policy, keeping the euro in check. The Australian dollar jumped on Wednesday as strong inflation data raised the possibility of sooner than expected interest rate rises, whilst the Japanese yen was calm as it’s central bank retained its easy monetary policy stance.”

Tim Hallinan, Trading Director

Main Headlines

The Democrats have announced a minimum tax on the biggest companies in the US, which would see companies making more than $1bn in profit a year, forced to pay back 15% of that in corporation taxes per year. Senior Democratic senators laid out plans for a new minimum tax on over 200 US companies, in support of Joe Biden’s Build Back Better agenda. This was spearheaded by Elizabeth Warren, Angus King and Ron Wyden. The latter told reporters that the minimum tax plans aimed to raise between $300mn and $400mn in the next ten years. The policy will reduce the ability of firms to use tax loopholes and claim deductions to reduce their tax base.

UK Chancellor Rishi Sunak will commit to fiscal discipline in the Budget as upgraded growth forecasts for the UK economy show faster than expected growth, giving the Chancellor the chance to unveil extra public spending. This is an opportunity for Sunak to make his case to parliament and the country that he has successfully steered the country through the volatile economic waters brought about by Covid-19, showing that the long-term economic “scarring” of the economy will be less severe than expected. The updated forecast will lend credibility to Sunak’s plans to investment in the NHS and Levelling Up in the Budget.


Sterling is higher against the dollar and lower against the euro in overnight trade. The deadline to avert a crippling rail strike during the COP26 summit in Glasgow is just hours away. ScotRail and the Scottish government have given the RMT until 17:00 on Wednesday to accept an offer already agreed to by three other unions. The RMT has described the move as like “having a gun pointed at our head”. On Tuesday, Scotland’s Transport Minister Graeme Dey said he was “not optimistic” industrial action would be avoided. The price of a pint of beer will have to rise by as much as 30p to help pay for higher wages and energy costs, following the rise in the National Living Wage to £9.50 per hour in April for over 23-year-olds, according to City Pub Group.


The euro is stronger against most major currencies overnight. As the new German parliament opened, there was a cautious tone struck by departing president Wolfganag Schauble who stated that German lawmakers have a ‘responsibility to strengthen the parliament in the face of growing demands from the electorate to act on the results of the election. New Bundestag President Barbel Bas, a Social Democrat will face the challenge of waiting for Olaf Scholz to finalise a German coalition government with the Greens and FDP. Emmanuel Macron will have a working lunch today at the Elysée palace with his Polish counterpart, Andrzej Duda, aimed at ending the EU rule of law crisis.


The dollar is lower against most majors in early morning trade. An expert committee advising the Food and Drug Administration on Tuesday recommended that regulators authorize Pfizer-BioNTech’s coronavirus vaccine for 5- to 11-year-olds, bringing about 28 million children a major step closer to becoming eligible for shots. The panel of vaccine experts voted 17 to 0, with one abstention, endorsing the vaccine be permitted for children 5 years to 11 years of age and concluding that the benefits of the shot outweigh any risks. The positive recommendation will likely soon lead to an expansion of the U.S. vaccination campaign to millions of young children.


U.S. stocks rose to all-time highs as corporate earnings helped boost sentiment amid lingering concerns about inflation and growth. The S&P 500 and Dow Jones Industrial Average set records as Tuesday’s round of earnings kicked off, with United Parcel Service and General Electric Co gaining after strong results. Facebook Inc. dropped as a pledge to buy back more shares and increase spending on digital offerings was offset by a revenue miss. Big-tech peers Twitter Inc., Alphabet Inc. and Microsoft Inc. are reporting after close of regular trading

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

8:00 a.m.: Germany Sept. import price index, Nov. GfK consumer confidence
8:00 a.m.: Denmark Sept. retail sales
8:45 a.m.: France Oct. consumer confidence, Sept. PPI
9:00 a.m.: Turkey Sept. trade balance
9:30 a.m.: Sweden Sept. trade balance
10:00 a.m.: Euro-area Sept. M3 money supply
1:30 p.m.: U.K. Treasury delivers budget & OBR forecast
2:30 p.m.: U.S. Sept. durable goods orders
4:30 p.m.: EIA crude oil inventory report


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