Morning Report

September 21, 2021

“Safe haven currencies including the dollar benefitting as the Chinese yuan dropped to a near month low on Tuesday, as investors sought shelter from a potential default by property developer Evergrande. Sterling could falter in the coming weeks with the Bank of England striking a less confident tone over consumer and retail spending in the UK economy, despite strong inflation figures.”

Tim Hallinan, Trading Director

Main Headlines

The Biden Administration announced a new Covid-19 travel policy, with vaccinated passengers from anywhere in the world will be allowed to travel to the United States from November. This brings an end to the 18-month travel ban first introduced by the Trump Administration in March 2020. Since last year, people without US citizenship, green cards of specific exemptions have been banned from travelling to the US from the UK, Ireland, the Schengen Area, China, India, Iran, South Africa or Brazil. The announcement was made as foreign world leaders arrive in New York for the UN General Assembly.

UK public borrowing fell last month as the economy rebounded, despite inflation pushing up the cost of public debt. Public sector net borrowing was £20.5bn in August, £5.5bn less than in the same month last year, according to the ONS figures on Tuesday. The figure for public sector net borrowing was marginally lower than the £21.9bn forecast by the Office for Budget Responsibility and it overshot the Reuters forecast of £15.6bn. Crucially, interest payments on public debt rose to £6.3bn, which was £2.9bn higher than in the same month in 2020. Retail price inflation means that the interest payment figure was significantly higher than the OBR forecast.


Sterling is well-bid against most majors overnight. Defence Secretary Ben Wallace has launched an investigation into a data breach involving the email addresses of dozens of Afghan interpreters who worked for British forces. More than 250 people seeking relocation to the UK – many of whom are in hiding – were mistakenly copied into an email from the Ministry of Defence. Boris Johnson is due to meet with US President Joe Biden on Tuesday at the White House, amidst the diplomatic victories for ending the US travel ban from November and the AUKUS submarine alliance. Johnson claimed that Dutch PM Mark Rutte offered to mediate talks on the Northern Ireland protocol between the UK and EU, despite Dutch diplomat denying the claim.


The euro is higher against the dollar and lower against sterling in early morning trade. The EU’s top leaders on Monday bluntly accused U.S. President Joe Biden of disloyalty to the transatlantic alliance, and demanded he explain why he misled France and other European partners in forging a new strategic tie-up with the U.K. and Australia in the Indo-Pacific. Greece’s pandemic-battered economy will bounce back even more quickly than its government projects and could return to pre-crisis levels this year, according to Bank of Greece Governor Yannis Stournaras. The strong rebound, coupled with Athens’ commitment to structural reforms, should pave the way for the European Central Bank to continue to buy Greek debt under its asset purchases programs.


The dollar is lower most major currencies overnight. The US Covid-19 death toll surpasses the 1918 Spanish flu death toll, as the US health care system fails to deal with a resurgent Delta variant. Hospitalisations and severe illness caused by Covid-19 among largely unvaccinated people in the Southern and Mid-West United States. This has driven the rolling weekly average of daily Covid-19 deaths to about 1,900 – the highest level since December 2020. President Biden intends to increase to 125,000 the number of refugees who can enter the United States in the fiscal year beginning Oct. 1, the State Department announced on Monday. The policy is unlikely to affect the situation of Afghans and Haitians, arguably in most need of asylum.


A selloff in stocks moderated in Asia on Tuesday as traders assessed risks from China’s crackdown on the real-estate sector and looked ahead to this week’s Federal Reserve meeting. Treasury yields edged up. Japan fell after reopening following a holiday, while Hong Kong slipped but avoided a repeat of the property-led tumble from a day earlier. U.S. and European futures advanced, suggesting a degree of improvement in sentiment. Dip-buyers in the last hour of trading helped the S&P 500 pare some losses overnight, though the index still posted the biggest drop since May. Treasuries pared an advance and the dollar dipped. Aside from worries over Evergrande’s ability to make good on $300 billion of liabilities, Wednesday’s Federal Reserve meeting also looms. Policy makers are expected to start laying the groundwork for paring stimulus.

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

8:00 a.m.: Hungary to sell bills

9:05 a.m.: ECB’s Guindos speaks

9:30 a.m.: Riksbank interest rate decision

11:00 a.m.: OECD publishes Euro-area interim economic outlook

11:00 a.m.: Riksbank press conference on policy decision

11:15 a.m.: Switzerland and Austria to sell bills

11:30 a.m.: Germany to sell bonds

12:00 p.m.: Finland to sell bonds

12:30 p.m.: ESM to sell bills

1:00 p.m.: Russia to sell notes

2:00 p.m.: Hungary central bank rate decision

Corporate Events

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