Morning Report

September 30, 2021

“The dollar is continuing its march upwards, as the government shutdown appears to be averted. This is coupled with the slowing pace of the global economic recovery and high inflation, which make bond purchase tapering increasingly imminent and fuel the growth in US yields and the greenback.”

Sam Cornford, Partner and Head of Trading

Main Headlines

Joe Biden is poised to avoid a disruptive shutdown of the federal government, but negotiations continue on his economic agenda before a planned Thursday vote on an infrastructure package that underscores deep divisions among Democrats. The Senate will vote Thursday morning – the eve of the new fiscal year – to extend government funding until 3 December, sending the package to the House and ultimately to Biden’s desk for signature with just hours to spare.  The passage of the bills through Congress has become linked and Democrats fear they will suffer a political backlash if they fail to pass them.

The UK economy grew faster than previously thought in the second quarter thanks to a stronger performance of health services and arts than initial estimates. Gross domestic product rose rose 5.5% in the second quarter instead of the 4.8% previously estimated, Office for National Statistics figures show. The increase left the economy 3.3% smaller than it was before the pandemic struck. Government spending, exports and business investment were all stronger than previously estimated by the ONS. Bank of England Governor Andrew Bailey on Wednesday said that output is unlikely to recover its pre-pandemic level until early next year, later than officials predicted in August.


Sterling is stronger versus the euro and weaker against the dollar this morning. Three more U.K. energy companies were pushed out of business by sky-high natural gas prices, adding to pressure on the government to step in. Igloo Energy Supply, Enstroga and Symbio Energy announced their collapse on Wednesday, representing a total of about 233,000 households. Ministers are set to outline plans to shift green surcharges from household electricity bills on to gas bills in an attempt to nudge consumers towards lower-carbon alternatives. The announcement is likely to prove controversial at a time household and industrial gas bills are set to rise 12 per cent in October.


The euro is lower against most major currencies overnight. Sweden’s finance minister Magdalena Andersson has been nominated as the next leader of the Social Democrats, putting her on course to become the Nordic country’s first female prime minister. Andersson will replace Prime Minister Stefan Lofven as party leader at a congress in November before facing a parliamentary vote. Meanwhile, European judges have struck down two trade and fisheries agreements between the EU and Morocco, in a victory for campaigners who argued the union had not gained consent from the disputed territory of Western Sahara.


The dollar is up against most majors in the early morning trade. Jay Powell, chair of the US Federal Reserve, said it was “frustrating” that supply-chain bottlenecks were holding back the recovery of the world’s largest economy and have helped to fuel more elevated price pressures as they have intensified. US rent data for the past two months show no sign yet of the usual seasonal dip at this time of year: a Zillow Group Inc. index based on the mean of listed rents rose 11.5% in August from a year earlier, with some cities in Florida, Georgia and Washington state seeing increases of more than 25%.


US and European futures rose Thursday as investors weighed an American agreement to avoid a government shutdown. Asian stocks were mixed amid weak Chinese data. Japanese shares slipped as the ruling party’s new leader, who is set to become the next prime minister, is seen by investors as maintaining stability. China edged up ahead of a week-long holiday, while Hong Kong fell. China’s factory activity contracted in September for the first time since the pandemic began last year, a sign of the damage a widespread electricity crunch is having on an already slowing economy.

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

8:00 a.m.: U.K. Sept. Nationwide house prices; 2Q GDP

8:00 a.m.: Denmark 2Q GDP, Aug. unemployment

8:45 a.m.: France Sept. CPI

9:00 a.m.: Spain August retail sales

9:30 a.m.: Riksbank publishes minutes from Sept. 20 meeting

9:55 a.m.: Germany Sept. unemployment change

10:30 a.m.: Portugal Sept. CPI

10:50 a.m.: ECB’s Centeno speaks

11:00 a.m.: Italy Sept. preliminary CPI

11:00 a.m.: Euro-area Aug. unemployment rate

11:00 a.m.: Sweden to sell linkers

11:00 a.m.: Hungary to sell bonds

12:15 p.m.: ECB’s Visco speaks

1:00 p.m.: Riksbank’s Floden speaks

2:00 p.m.: Germany Sept. CPI

2:30 p.m.: Czech central bank sets repurchase rate

2:30 p.m.: U.S. initial jobless claims

3:00 p.m.: Russia 2Q current account balance

4:30 p.m.: ECB’s de Cos speaks

EIA production and petroleum supply reports

Corporate Events

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